##### 



SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549
 FORM 10-K/A
Amendment No. 2 x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT     OF 1934 For the Fiscal Year ended December 31, 2004
Commission file number 1-12284 GOLDEN STAR RESOURCES LTD.  Canada
(State or other Jurisdiction of
Incorporation or Organization)
    
    98-0101955
(I.R.S. Employer
Identification No.)10901 West Toller Drive, Suite 300
Littleton, Colorado
(Address of Principal Executive Office)
    
    80127-6312
(Zip Code)
 Registrants telephone number, including area code (303) 830-9000 Securities registered or to be registered pursuant to Section 12 (b) of the Act: Title of Each Class
    
    Name of each exchange on which registeredCommon Shares
    
    American Stock Exchange
 Securities registered or to be registered pursuant to Section 12(g) of the Act: Warrants Issued February 2003 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of Registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form l0-K. o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act). Yes x No o The aggregate market value of the voting and non-voting common equity held by non-affiliates
of the Registrant was approximately $609.4 million as of June 30, 2004, based on the closing
price of the shares on the American Stock Exchange of $4.64 per share. Number of Common Shares outstanding as at January 31, 2005: 142,346,703.




---



##### 



DOCUMENTS INCORPORATED BY REFERENCE Portions of our Definitive Proxy Statement to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A in connection with the 2005 Annual Meeting of Shareholders are
incorporated by reference to Part III of this Report on Form 10-K/A. EXPLANATORY NOTE This Amendment No. 2 to the Companys 2004 Annual Report on Form 10-K is solely for the purpose of
including Managements Report on Internal Control Over Financial Reporting and the Report of
Independent Registered Public Accounting Firm as required by Item 9A and as included in Item 8.
These reports were initially omitted from Registrants original 2004 Form 10-K filing, as amended
(Original Report) as permitted by the Order under Section 36 of the Securities Exchange Act of
1934 Granting an Exemption from Specified Provisions of Exchange Act Rules 13a-1 and 15d-1 issued
by the Securities and Exchange Commission (SEC) on November 30, 2004. Conforming changes have
also been made to Item 9A and Exhibits 31.1 and 31.2 included in the Original Report. Exhibits
23.1 and 32.1 and 32.2 are being currently dated but are otherwise unchanged from those filed in
the Original Report. No other changes to the Original Report have been made. This Amendment No. 2
does not reflect events occurring after the filing of the Original Report or modify or update the
disclosures therein in any way other than as described above. ITEM 8     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements of
Golden Star Resources Ltd. Managements Responsibility for Financial Information and Report on
Internal Control Over Financial Reporting
    2Report of Independent Registered Public Accounting Firm
    3Consolidated Balance Sheets as of December 31, 2004 and 2003
    4Consolidated Statements of Operations for the years ended
December 31, 2004, 2003 and 2002
    5Consolidated Statements of Changes in Shareholders Equity for the years ended
December 31, 2004, 2003 and 2002
    6Consolidated Statements of Cash Flows for the years ended
December 31, 2004, 2003 and 2002
    7Notes to the Consolidated Financial Statements
    8




---



##### 



MANAGEMENTS RESPONSIBILITY FOR FINANCIAL INFORMATION AND REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING To the Shareholders of
Golden Star Resources Ltd.: The consolidated financial statements and all information in the Annual Report are the
responsibility of the Board of Directors and management. The consolidated financial statements
have been prepared by management based on information available to February 2, 2005, and are in
accordance with accounting principles generally accepted in Canada. Management is responsible for establishing and maintaining adequate internal control over financial
reporting. Our internal control over financial reporting is a process designed under the
supervision of management, including the Chief Executive Officer and Chief Financial Officer, in
order to provide reasonable assurance that financial information is accurate and reliable, and that
our assets are safeguarded. Limitations exist in all cost effective systems of internal controls.
Our systems have been designed to provide reasonable but not absolute assurance that financial
records are adequate to allow for the completion of reliable financial information and the
safeguarding of our assets. In designing our system of internal controls we have used the
framework established in Internal Control-Integrated Frameworkissued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). We believe that the systems are
adequate to achieve the stated objectives. Our system of internal control over financial reporting includes policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with
accounting principles generally accepted in Canada, and that receipts and expenditures are being
made only in accordance with authorizations of management and our Board of Directors; and (iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of our assets that could have a material effect on the financial statements. The Audit Committee of the Board of Directors is comprised of three outside directors, operates in
accordance with its charter and meets quarterly with management and the independent auditors to
ensure that management is maintaining adequate internal controls and systems and to approve the
annual and quarterly consolidated financial statements of the Company. The Committee also reviews
the audit plan of the independent auditors and discusses the results of their audit and their
report prior to submitting the consolidated financial statements to the Board of Directors for
approval. Management assessed the effectiveness of our internal control over financial reporting as of
December 31, 2004. Based upon its assessment, management concluded that, as of December 31, 2004,
our internal control over financial reporting is effective based on the COSO criteria. The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered
Accountants, who were appointed by the shareholders. Such registered public accounting firm has
issued an attestation report on managements assessment of our internal control over financial
reporting and such report is included herein. /s/ Peter J. Bradford
    
    /s/ Allan J. MarterPeter
J. Bradford
President and
Chief Executive Officer
    
    Allan J. Marter
Senior Vice President and
Chief Financial OfficerApril 28, 2005
    
    April 28, 2005
 2




---



##### 



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




---



##### 



GOLDEN STAR RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands of US dollars except shares issued and outstanding) As of December 31,ASSETS
    
    2004
    
    
    2003CURRENT ASSETSCash and cash equivalents (Note 1)
    
    $
    51,727
    
    
    $
    89,970Accounts receivable
    
    
    3,592
    
    
    
    790Inventories (Notes 1 and 3)
    
    
    15,366
    
    
    
    12,661Due from sale of property (Note 4)
    
    
    1,000
    
    
    
    1,000Tax asset (Note 17)
    
    
    1,542
    
    
    
    Deposits (Note 5)
    
    
    5,102
    
    
    
    Prepaids
    
    
    517
    
    
    
    514Total Current Assets
    
    
    78,846
    
    
    
    104,935RESTRICTED CASH (Note 14)
    
    
    3,351
    
    
    
    3,317DUE FROM SALE OF PROPERTY (Note 4)
    
    
    
    
    
    
    1,000LONG TERM INVESTMENTS (Note 6)
    
    
    5,528
    
    
    
    888DEFERRED EXPLORATION AND DEVELOPMENT COSTS (Note 7)
    
    
    7,452
    
    
    
    9,108PROPERTY, PLANT AND EQUIPMENT (Note 8)
    
    
    28,653
    
    
    
    18,202MINING PROPERTIES (Note 9)
    
    
    74,197
    
    
    
    56,808MINE CONSTRUCTION-IN-PROGRESS (Note 10)
    
    
    51,159
    
    
    
    27,376DEFERRED STRIPPING (Notes 1 and 11)
    
    
    1,357
    
    
    
    OTHER ASSETS
    
    
    1,617
    
    
    
    757Total Assets
    
    $
    252,160
    
    
    $
    222,391LIABILITIESCURRENT LIABILITIESAccounts payable
    
    $
    7,010
    
    
    $
    3,800Construction retention payable
    
    
    
    
    
    
    1,350Other accrued liabilities
    
    
    9,203
    
    
    
    2,859Current debt (Note 12)
    
    
    1,267
    
    
    
    142Total Current Liabilities
    
    
    17,480
    
    
    
    8,151LONG TERM DEBT (Note 12)
    
    
    1,707
    
    
    
    657ASSET RETIREMENT OBLIGATIONS (Note 13)
    
    
    8,660
    
    
    
    7,745Total Liabilities
    
    
    27,847
    
    
    
    16,553MINORITY INTEREST
    
    
    6,353
    
    
    
    7,476COMMITMENTS 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: 142,244,112 at December 31, 2004; 132,924,278 at December 31, 2003
    
    
    342,494
    
    
    
    326,623CONTRIBUTED SURPLUS
    
    
    2,040
    
    
    
    955DEFICIT
    
    
    (126,574
    )
    
    
    (129,216
    )Total Shareholders Equity
    
    
    217,960
    
    
    
    198,362Total Liabilities and Shareholders Equity
    
    $
    252,160
    
    
    $
    222,391
 The accompanying notes are an integral part of these consolidated financial statements. By:
    
    /s/ David K. Fagin  Director
    
    By:
    
    /s/ Peter J. Bradford   Director
 4




---



##### 



GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in thousands of US dollars except per share amounts) For the years ended December 31,2004
    
    
    2003
    
    
    2002REVENUEGold sales
    
    $
    60,690
    
    
    $
    63,512
    
    
    $
    38,091Royalty income
    
    
    3,049
    
    
    
    
    
    
    
    Interest and other
    
    
    1,290
    
    
    
    858
    
    
    
    71165,029
    
    
    
    64,370
    
    
    
    38,802EXPENSESMining operations
    
    
    39,095
    
    
    
    32,125
    
    
    
    26,747Depreciation, depletion and amortization
    
    
    8,096
    
    
    
    4,993
    
    
    
    2,459Accretion of asset retirement amortization
    
    
    645
    
    
    
    578
    
    
    
    Total production costs
    
    
    47,836
    
    
    
    37,696
    
    
    
    29,206Exploration expense (Note 1)
    
    
    895
    
    
    
    594
    
    
    
    485General and administrative expense
    
    
    6,811
    
    
    
    5,153
    
    
    
    3,886Corporate development expense
    
    
    4,504
    
    
    
    10
    
    
    
    Option expense (Note 16)
    
    
    1,386
    
    
    
    403
    
    
    
    Loss on equity investment
    
    
    331
    
    
    
    
    
    
    
    Abandonment and impairment of mineral properties
    
    
    470
    
    
    
    175
    
    
    
    Loss on sale of assets
    
    
    
    
    
    
    
    
    
    
    (425
    )Interest
    
    
    139
    
    
    
    42
    
    
    
    265Foreign exchange (gain)/loss
    
    
    280
    
    
    
    (2,331
    )
    
    
    (139
    )Total expenses
    
    
    62,652
    
    
    
    41,742
    
    
    
    33,278INCOME BEFORE THE UNDERNOTED
    
    
    2,377
    
    
    
    22,628
    
    
    
    5,524Gain on sale of marketable securities
    
    
    
    
    
    
    1,905
    
    
    
    Omai preferred share redemption premium
    
    
    
    
    
    
    
    
    
    
    170Income before minority interest
    
    
    2,377
    
    
    
    24,533
    
    
    
    5,694Minority interest
    
    
    (1,277
    )
    
    
    (2,577
    )
    
    
    (838
    )NET INCOME BEFORE TAX
    
    
    1,100
    
    
    
    21,956
    
    
    
    4,856Income tax recovery (Note 17)
    
    
    1,542
    
    
    
    
    
    
    
    NET INCOME
    
    $
    2,642
    
    
    $
    21,956
    
    
    $
    4,856NET INCOME PER COMMON SHARE  BASIC (Note 18)
    
    $
    0.019
    
    
    $
    0.198
    
    
    $
    0.067NET INCOME PER COMMON SHARE  DILUTED (Note 18)
    
    $
    0.018
    
    
    $
    0.186
    
    
    $
    0.063WEIGHTED AVERAGE SHARES OUTSTANDING
(millions of shares)
    
    
    138.3
    
    
    
    111.0
    
    
    
    72.4
 The accompanying notes are an integral part of these consolidated financial statements. 5




---



##### 



GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Stated in thousands of United States dollars except share amounts) EquityComponentNumber of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ofCommon
    
    
    Share
    
    
    Contributed
    
    
    
    
    
    
    ConvertibleShares
    
    
    Capital
    
    
    Surplus
    
    
    Warrants
    
    
    Debentures
    
    
    DeficitBalance 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
    )
    
    
    
    
    
    
    Option issued  net of forfeitures
    
    
    
    
    
    
    (955
    )
    
    
    955
    
    
    
    
    
    
    
    
    
    
    
    Shares issued under options
    
    
    1,518,420
    
    
    
    2,858
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares issued under warrants
    
    
    8,167,956
    
    
    
    8,595
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock bonus
    
    
    57,200
    
    
    
    118
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares issued to acquire property
    
    
    2,750,000
    
    
    
    12,045
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cumulative effect of change in
accounting method
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    483Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,956Balance at December 31, 2003
    
    
    132,924,278
    
    
    
    324,262
    
    
    
    955
    
    
    
    2,361
    
    
    
    
    
    
    
    (129,216
    )Warrants exercised
    
    
    
    
    
    
    755
    
    
    
    
    
    
    
    (755
    )
    
    
    
    
    
    
    Option issued  net of forfeitures
    
    
    
    
    
    
    
    
    
    
    1,218
    
    
    
    
    
    
    
    
    
    
    
    Shares issued under options
    
    
    767,180
    
    
    
    1,239
    
    
    
    (133
    )
    
    
    
    
    
    
    
    
    
    
    Shares issued under warrants
    
    
    8,494,609
    
    
    
    14,332
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares issued to acquire property
    
    
    58,045
    
    
    
    300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,642Balance at December 31, 2004
    
    
    142,244,112
    
    
    $
    340,888
    
    
    $
    2,040
    
    
    $
    1,606
    
    
    $
    
    
    
    $
    (126,574
    )
 The accompanying notes are an integral part of these consolidated financial statements. 6




---



##### 



GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of US dollars) For the years ended December 31,2004
    
    
    2003
    
    
    2002OPERATING ACTIVITIES:Net income
    
    $
    2,642
    
    
    $
    21,956
    
    
    $
    4,856Reconciliation of net income to net cash used in
operating activities:Depreciation, depletion and amortization
    
    
    8,096
    
    
    
    4,993
    
    
    
    2,459Deferred stripping
    
    
    (1,357
    )
    
    
    
    
    
    
    Loss on equity investment
    
    
    331
    
    
    
    
    
    
    
    Convertible debentures accretion
    
    
    
    
    
    
    
    
    
    
    46Premium on Omai preferred share redemption
    
    
    
    
    
    
    
    
    
    
    (170
    )Non-cash employee compensation
    
    
    1,386
    
    
    
    1,085
    
    
    
    78Abandonment and impairment of mineral properties
    
    
    470
    
    
    
    175
    
    
    
    Tax asset
    
    
    (1,542
    )
    
    
    
    
    
    
    Gain on sale of assets
    
    
    
    
    
    
    
    
    
    
    (425
    )Reclamation expenditures
    
    
    (730
    )
    
    
    (841
    )
    
    
    (465
    )Asset retirement obligation
    
    
    645
    
    
    
    578
    
    
    
    Minority interest
    
    
    1,277
    
    
    
    2,577
    
    
    
    83811,218
    
    
    
    30,523
    
    
    
    7,217Changes in assets and liabilities:Accounts receivable
    
    
    (2,802
    )
    
    
    1,187
    
    
    
    (746
    )Inventories
    
    
    (2,705
    )
    
    
    (4,240
    )
    
    
    (424
    )Accounts payable and accrued liabilities
    
    
    8,204
    
    
    
    690
    
    
    
    45Marketable securities
    
    
    
    
    
    
    906
    
    
    
    (906
    )Other
    
    
    (5
    )
    
    
    10
    
    
    
    (293
    )Net Cash Provided by Operating Activities
    
    
    13,910
    
    
    
    29,076
    
    
    
    4,893INVESTING ACTIVITIES:Expenditures on deferred exploration and development
    
    
    (5,260
    )
    
    
    (4,539
    )
    
    
    (208
    )Expenditures on mining properties
    
    
    (19,302
    )
    
    
    (31,142
    )
    
    
    (12,075
    )Expenditures on property, plant and equipment
    
    
    (12,286
    )
    
    
    (10,691
    )
    
    
    (3,430
    )Expenditures on mine construction-in-progress
    
    
    (23,783
    )
    
    
    (22,833
    )
    
    
    Omai preferred share redemption
    
    
    
    
    
    
    
    
    
    
    310Asset retirement obligation assets
    
    
    1,000
    
    
    
    1,192
    
    
    
    Sale of property
    
    
    1,000
    
    
    
    1,000
    
    
    
    5,425Deposits
    
    
    (5,102
    )
    
    
    
    
    
    
    Investments
    
    
    (4,971
    )
    
    
    (888
    )
    
    
    Other
    
    
    (894
    )
    
    
    (139
    )
    
    
    (392
    )Net Cash Used in Investing Activities
    
    
    (69,598
    )
    
    
    (68,040
    )
    
    
    (10,370
    )FINANCING ACTIVITIES:Issuance of share capital, net of issue costs
    
    
    15,270
    
    
    
    113,408
    
    
    
    29,095Debt repayment
    
    
    (153
    )
    
    
    (5,289
    )
    
    
    (6,502
    )Increase in debt
    
    
    2,328
    
    
    
    799
    
    
    
    2,384Other
    
    
    
    
    
    
    
    
    
    
    7Net Cash Provided by Financing Activities
    
    
    17,445
    
    
    
    108,918
    
    
    
    24,984Increase/(decrease) in cash and cash equivalents
    
    
    (38,243
    )
    
    
    69,954
    
    
    
    19,507Cash and cash equivalents, beginning of period
    
    
    89,970
    
    
    
    20,016
    
    
    
    509Cash and cash equivalents end of period
    
    $
    51,727
    
    
    $
    89,970
    
    
    $
    20,016
 See Note 19 for supplemental cash flow information. Cash and cash equivalents at December 31, 2004 consisted of $2.8 million in
money market funds, $38.9 million of short-term (less than 90 days) investments and $10.0 million of cash in checking accounts. The accompanying notes are an integral part of these consolidated financial statements. 7




---



##### 



GOLDEN STAR RESOURCES LTD.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(All amounts in tables are in thousands of US Dollars unless noted otherwise) 
 1. Summary of Significant Accounting Policies Basis of Consolidation and the Preparation of Financial Statements These consolidated financial statements are prepared and reported in United States (US) dollars
and in accordance with generally accepted accounting principles in Canada, (Canadian GAAP) which
differ in some respects from GAAP in the United States (US GAAP). These differences are
quantified and explained in Note 22. The consolidated financial statements include the accounts
of the Company and its majority owned subsidiaries and joint ventures. All material inter-company
balances and transactions have been eliminated. Fiscal Year Our fiscal year runs from January 1 to December 31. Use of Estimates Preparation of our consolidated financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that can affect
reported amounts of assets, liabilities, revenues and expenses. The more significant areas
requiring the use of estimates include asset impairments, depreciation and amortization of assets,
and site reclamation and closure accruals. Accounting for these areas is subject to estimates and
assumptions regarding, among other things, gold reserves, gold recoveries, future gold prices,
future operating costs, asset usage rates, and future mining activities. Management bases its
estimates on historical experience and on other assumptions we believe to be reasonable under the
circumstances. However, actual results may differ from our estimates. Cash and Cash Equivalents Cash and cash equivalents consist of cash deposits and highly liquid short term investments. We
consider all highly liquid marketable securities with maturities of less than 91 days at date of
purchase to be cash equivalents. Our cash equivalents consist mostly of US and Canadian government
treasury bills, agency notes, auction rate certificates and money market funds. Inventories Inventories classifications include stockpiled ore, in-process inventory, finished goods
inventory and materials and supplies. All of our inventories are recorded at the lower of cost
or market, including direct production costs and attributable overhead and depreciation. Stockpiled ore represents coarse ore that has been extracted from the mine and is ready for further
processing. Stockpile ore is measured by estimating the number of tonnes (via truck counts or by
physical surveys) added or removed from the stockpile, the number of contained ounces (based on
assay data) and the estimated gold recovery percentage. Stockpiled ore value is based on the costs
incurred (including depreciation and amortization) in bringing the ore to the stockpile. Costs are
added to the stockpiled ore based on current mining costs per tonne and are removed at the average
cost per recoverable ounce of gold in the stockpile. In-process inventory represents material that is currently in the process of being treated to
extract the contained gold and to transform it into a saleable product. The amount of gold in the
in-process inventory is determined by assay and by measure of the quantities of the various
gold-bearing materials in the recovery process. The in-process gold is valued at the average of
the beginning inventory and the cost of material fed into the processing stream plus in-process
conversion costs including applicable depreciation and amortization related to the processing
facilities. 8




---



##### 



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




---



##### 



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




---



##### 



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




---



##### 



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




---



##### 



3. Inventories As of December 31,2004
    
    
    
    2003Stockpiled ore
    
    
    $
    3,659
    
    
    
    $
    4,167In-process
    
    
    
    2,858
    
    
    
    
    2,821Materials and supplies
    
    
    
    8,849
    
    
    
    
    5,673Total
    
    
    $
    15,366
    
    
    
    $
    12,661
 There were approximately 15,400 and 28,000 recoverable ounces of gold in ore stockpile inventories
at December 31, 2004 and 2003, respectively. These ounces contained in our ore stockpile
inventories are included in ore reserves. The stockpile inventories are for the most part
short-term surge piles which will be processed in the next 12 months or less. 4. Guiana Shield transactions In 2001 we sold our 50% interest in the Rosebel exploration property in South America to Cambior
Inc. In addition to a $5.0 million payment received at closing in 2002 and a future royalty (or
participation right) based on future Rosebel production, the terms of the sale agreement provided
that Cambior would make three deferred payments of $1.0 million each and also pays a royalty on
future gold production. The first of the deferred payments was received in the first quarter of
2003. The second deferred payment was made in the first quarter of 2004, and the third and final
payment is expected in the first quarter of 2005. We began receiving royalty payments in early 2004 from Cambior Inc. related to the participation
right. Royalty income totaled $3.0 million during 2004. On December 31, 2004 we sold the Rosebel
partition right to our 53% owned subsidiary Guyanor Ressources SA for $12.0 million, of which $6.0
million was paid on January 8, 2005 and the balance is due to Golden Star prior to June 30, 2005.
There was no gain recognition on the sale. Additionally, Golden Star will receive up to $2.50 per
ounce of Rosebel production for all production in excess of 2 million ounces but less than 4
million ounces and up to $5.00 per ounce when production exceeds 4 million ounces up to 7 million
ounces. 5. Deposits Represents cash advances for equipment and materials purchases at WGL and BGL. 6. Long Term Investments Represents a $1.4 million investment in Goldmin Holdings, a private exploration firm with a focus
on South American projects and a $4.1 million investment in the common shares of Moto Gold Mines
Limited (Moto), a publicly traded gold exploration and development firm. We invested an additional $0.8 million in Goldmin Holdings during 2004 bringing our ownership to
30.5%. We carry this investment as an equity investment and recognized $0.3 million of equity
losses in 2004. During 2004 when we acquired a 9.5% equity interest in Moto for $4.1 million. In addition to the
common shares, we received warrants, which if exercised will raise our interest to 13.3%. This
investment is carried as a long-term investment. The fair value of our investment in Moto remained
at $4.1 million as of December 31, 2004. 13




---



##### 



7. Deferred Exploration and Development Costs The consolidated property expenditures on our exploration projects for the year ended December 31,
2004 were as follows: Deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DeferredExploration &
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exploration &Development
    
    
    
    Capitalized
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reclassified
    
    
    
    DevelopmentCosts
    
    
    
    Exploration
    
    
    
    
    
    
    
    
    Impairment
    
    
    
    to Mining
    
    
    
    Costsas of 12/31/03
    
    
    
    Expenditures
    
    
    
    Acquisitions
    
    
    
    Write-offs
    
    
    
    Property
    
    
    
    as of 12/31/04GHANA:Bogoso Sulfide Project
    
    
    $
    5,930
    
    
    
    $
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    
    $
    (5,930
    )
    
    
    $
    Akropong Trend & Other
Ghana
    
    
    
    2,037
    
    
    
    
    406
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,443Prestea Property Projects
    
    
    
    
    
    
    
    
    2,537
    
    
    
    
    
    
    
    
    
    (470
    )
    
    
    
    
    
    
    
    
    2,067Beta Boundary
    
    
    
    814
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (814
    )
    
    
    
    MALI:Mininko
    
    
    
    130
    
    
    
    
    903
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,033SIERRA LEONEMano River
    
    
    
    
    
    
    
    
    758
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    758FRENCH GUIANA:Bon Espoir
    
    
    
    
    
    
    
    
    
    
    
    
    
    501
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    501Paul Isnard
    
    
    
    
    
    
    
    
    
    
    
    
    
    256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256SURINAME:Saramacca
    
    
    
    197
    
    
    
    
    197
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    394TOTAL
    
    
    $
    9,108
    
    
    
    $
    4,801
    
    
    
    $
    757
    
    
    
    $
    (470
    )
    
    
    $
    (6,744
    )
    
    
    $
    7,452
 The Bogoso Sulfide Project and the Beta Boundary Project (now referred to as the Bondaye
Project) were reclassified as Mining Properties during 2004. Consolidated property expenditures for exploration projects for the year ended December 31, 2003
were as follows: Deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DeferredExploration &
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exploration &Development
    
    
    
    Capitalized
    
    
    
    
    
    
    
    
    
    
    
    
    
    DevelopmentCosts
    
    
    
    Exploration
    
    
    
    
    
    
    
    
    Impairment
    
    
    
    Costsas of 12/31/02
    
    
    
    Expenditures
    
    
    
    Acquisitions
    
    
    
    Write-offs
    
    
    
    as of 12/31/03GHANA:Obuom
    
    
    $
    269
    
    
    
    $
    9
    
    
    
    $
    
    
    
    
    $
    
    
    
    
    $
    278Bogoso Sulfide Project
    
    
    
    3,621
    
    
    
    
    119
    
    
    
    
    2,190
    
    
    
    
    
    
    
    
    
    5,930Akropong Trend & Other Ghana
    
    
    
    787
    
    
    
    
    972
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,759Beta Boundary
    
    
    
    
    
    
    
    
    814
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    814Other Bogoso Area Properties
    
    
    
    
    
    
    
    
    109
    
    
    
    
    
    
    
    
    
    (109
    )
    
    
    
    MALI:Mininko
    
    
    
    
    
    
    
    
    130
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130FRENCH GUIANA:Yaou
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    
    Dorlin
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    
    SURINAME:Saramacca
    
    
    
    
    
    
    
    
    197
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    197TOTAL
    
    
    $
    4,743
    
    
    
    $
    2,350
    
    
    
    $
    2,190
    
    
    
    $
    (175
    )
    
    
    $
    9,108
 14




---



##### 



8. Property, Plant and Equipment As of December 31, 2004
    
    
    
    As of December 31, 2003Property,
    
    
    
    
    
    
    
    
    
    
    
    
    
    Property,Property,
    
    
    
    
    
    
    
    
    Plant and
    
    
    
    Property,
    
    
    
    
    
    
    
    
    Plant andPlant and
    
    
    
    
    
    
    
    
    Equipment
    
    
    
    Plant and
    
    
    
    
    
    
    
    
    EquipmentEquipment at
    
    
    
    Accumulated
    
    
    
    Net Book
    
    
    
    Equipment at
    
    
    
    Accumulated
    
    
    
    Net BookCost
    
    
    
    Depreciation
    
    
    
    Value
    
    
    
    Cost
    
    
    
    Depreciation
    
    
    
    ValueBogoso/Prestea
    
    
    $
    27,722
    
    
    
    $
    5,057
    
    
    
    $
    22,665
    
    
    
    $
    15,765
    
    
    
    $
    4,143
    
    
    
    $
    11,622Prestea Underground
    
    
    
    238
    
    
    
    
    
    
    
    
    
    238
    
    
    
    
    227
    
    
    
    
    
    
    
    
    
    227Guyanor
    
    
    
    1,969
    
    
    
    
    1,951
    
    
    
    
    18
    
    
    
    
    1,985
    
    
    
    
    1,952
    
    
    
    
    33Wassa
    
    
    
    5,460
    
    
    
    
    
    
    
    
    
    5,460
    
    
    
    
    6,259
    
    
    
    
    
    
    
    
    
    6,259Corporate & other
    
    
    
    1,060
    
    
    
    
    788
    
    
    
    
    272
    
    
    
    
    782
    
    
    
    
    721
    
    
    
    
    61Total
    
    
    $
    36,449
    
    
    
    $
    7,796
    
    
    
    $
    28,653
    
    
    
    $
    25,018
    
    
    
    $
    6,816
    
    
    
    $
    18,202
 9. Mining Properties As of December 31, 2004
    
    
    
    As of December 31, 2003Mine
    
    
    
    
    
    
    
    
    Mine
    
    
    
    Mine
    
    
    
    
    
    
    
    
    MineProperty at
    
    
    
    Accumulated
    
    
    
    Property, Net
    
    
    
    Property at
    
    
    
    Accumulated
    
    
    
    Property, NetCost
    
    
    
    Amortization
    
    
    
    Book Value
    
    
    
    Cost
    
    
    
    Amortization
    
    
    
    Book ValueBogoso/Prestea
    
    
    $
    43,420
    
    
    
    $
    23,113
    
    
    
    $
    20,307
    
    
    
    $
    41,885
    
    
    
    $
    16,856
    
    
    
    $
    25,029Prestea Underground
    
    
    
    12,984
    
    
    
    
    
    
    
    
    
    12,984
    
    
    
    
    8,560
    
    
    
    
    
    
    
    
    
    8,560Wassa
    
    
    
    9,653
    
    
    
    
    
    
    
    
    
    9,653
    
    
    
    
    9,778
    
    
    
    
    
    
    
    
    
    9,778Bogoso Sulfide
    
    
    
    13,065
    
    
    
    
    
    
    
    
    
    13,065
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mampon
    
    
    
    13,676
    
    
    
    
    
    
    
    
    
    13,676
    
    
    
    
    13,441
    
    
    
    
    
    
    
    
    
    13,441Beta Boundary
    
    
    
    4,512
    
    
    
    
    
    
    
    
    
    4,512
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    $
    97,310
    
    
    
    $
    23,113
    
    
    
    $
    74,197
    
    
    
    $
    73,664
    
    
    
    $
    16,856
    
    
    
    $
    56,808
 Some prior period numbers have been adjusted to conform to the 2004 presentation. In June 2004 due to financial difficulties experienced by our joint venture partner, the portion of
the Prestea Underground owned by our joint venture partner reverted to our ownership per the terms
of the original joint venture agreement. As a result, a $2.4 million minority interest recorded
when the partnership was originally organized was reversed and a $2.4 million reduction was
recorded in the carrying value of the Prestea Underground Mining Property assets. The Bogoso Sulfide project, and the Beta Boundary project at Prestea, which is expected to feed the
proposed Bondaye processing plant, were deemed sufficiently advanced by early 2004 for
reclassification as Mining Properties rather than as exploration properties. Reclassification was
based upon having defined proven and probable reserves at both projects, completion of a
feasibility study for the Bogoso Sulfide project showing it to be economically viable, and advanced
engineering and design work on the Bondaye/Beta Boundary project which is now awaiting
environmental permits. The Mining Properties costs associated with these two projects will be
amortized over production ounces when gold production begins. 10. Mine Construction-in-Progress Mine construction in progress represents costs incurred at the Wassa project subsequent to
acquisition. The balance includes feasibility study costs, equipment purchases and construction
costs, including interim payments to the construction contractor and development costs. 11. Deferred Stripping We initiated a deferred waste stripping policy at the Plant-North pit at Prestea in the third
quarter of 2004. In the past, most of our pits have been relatively shallow and short-lived
because the Bogoso processing plant could effectively process only near-surface ores that had been
naturally oxidized by relatively shallow ground water. With recent plant modifications we are now
able to process certain deeper ores from Prestea. As a result we anticipate deeper pits with
longer lives than in the past. Adoption of this policy resulted in deferral of $1.4 million of
Plant-North waste stripping costs during the second half of 2004. There were no recoveries of
stripping costs during 2004. We expect that the entire $1.4 million of deferred stripping costs
will be recovered during 2005. The value of capitalized waste costs is included in the Mining
Properties balance on our consolidated balance sheets. The cost impact is included in the
statement of operations in the line titled Mining operations. 12. Debt 15




---



##### 



As of
    
    
    
    As ofDecember 31,
    
    
    
    December 31,2004
    
    
    
    2003Current debt:Equipment financing loans  Bogoso (Note a)
    
    
    $
    1,130
    
    
    
    $
    Equipment financing loans  Wassa (Note b)
    
    
    
    137
    
    
    
    
    142Total current debt
    
    
    $
    1,267
    
    
    
    $
    142Long term debt:Equipment financing loans  Bogoso (Note a)
    
    
    
    1,198
    
    
    
    
    Equipment financing loans  Wassa (Note b)
    
    
    $
    509
    
    
    
    $
    657Total long term debt
    
    
    $
    1,707
    
    
    
    $
    657
  (a)
    
    In June 2004 an equipment financing credit facility of up to $25 million was
established between Caterpillar Financial Services Corporation and BGL and WGL, subsidiaries of
Golden Star, with Golden Star as the guarantor of all amounts borrowed. The facility provides
credit for a mixture of new and used mining equipment and is available until April 2005.
Amounts drawn under this facility are repayable over five years for new equipment and over two
years for used equipment. The interest rate is fixed using the Federal Reserve Bank 2-year or
5-year swap rate plus 2.28% or we can opt for a floating interest rate of LIBOR plus 2.28%. As
of December 31, 2004, $2.3 million had been drawn to purchase used equipment and is repayable
in 24 equal monthly installments beginning December 2004 with an interest rate of 6.01%.(b)
    
    Caterpillar Financial Services Corporation - A $0.8 million installment loan was used to
purchase mobile equipment at Wassa and is repayable in 60 equal monthly installments from
December 2003 with an interest rate of 6.25%. 13. Asset Retirement Obligations Effective January 1, 2003, we changed our accounting policy for asset retirement obligations to
comply with CICA Handbook Section 3110, Asset Retirement Obligations. This change was made on a
retroactive basis. Upon the adoption of this new standard, we recognized a $0.5 million reduction
in the carrying value of liabilities related to future reclamation and other asset retirement
obligations. The cumulative effect of the adoption of this new standard totaled $0.5 million and
was recorded as a reduction in the deficit account in shareholders equity. Our Asset Retirement Obligations (ARO) recognize the present value of the ultimate closure cost
associated with reclamation, demolition and stabilization of our mining properties. Included in
this liability are the costs of mine closure and reclamation, processing plant and infrastructure
demolition, tailings pond stabilization and reclamation and environmental monitoring costs. 16




---



##### 



The changes in the carrying amount of the ARO during 2004 were as follows: Asset
Retirement Obligations
    
    
    Year ended December 31, 2004Balance at beginning of the year
    
    
    $
    7,745Accretion expense
    
    
    
    645Reclamation work performed
    
    
    
    (730
    )New AROs incurred during the period
    
    
    
    1,000Balance at December 31, 2004
    
    
    $
    8,660
 14. Commitments and Contingencies (a) Environmental
Regulations and Asset Retirement Obligations -We are not aware of any events of
material non-compliance with environmental laws and regulations in our operations which could have
a material adverse effect on our operations or financial condition. The exact nature of
environmental control problems, if any, which we may encounter in the future cannot be predicted,
primarily because of the changing character of environmental requirements that may be enacted
within various jurisdictions. Asset retirement obligations, which include environmental
rehabilitation liabilities for reclamation and for closure costs, were $6.0 million at
Bogoso/Prestea at December 31, 2004, up from $5.2 million at December 31, 2003. Asset retirement
obligations at Wassa totaled $2.7 million at December 31, 2004, up from $2.5 million at the end of
2003. (b) Cash
Restricted for Environmental Rehabilitation Liabilities -In 1999, we were required,
according to the acquisition agreement with the sellers of BGL, to restrict $6.0 million of cash to
be used for the ongoing and final reclamation and closure costs at Bogoso. The withdrawal of these
funds must be agreed to by the sellers, who are ultimately responsible for the reclamation in the
event of our non-performance. There have been no agreements for disbursements since 2001. We are
seeking to obtain an amendment to the agreement that would remove the restriction and in its place
establish a reclamation bond to meet Ghanas Environmental Protection Agency reclamation bonding
requirements as discussed below. At December 31, 2004, approximately $3.4 million of restricted
cash was held as a cash provision against future reclamation commitments at Bogoso. (c) Corporate Office Building Lease Effective January 1, 2004, we entered into a five year office
building lease for our corporate headquarters in Littleton, Colorado. The annual initial lease
rate was $19.00 per rentable square foot, which escalates to $21.00 per rentable square foot in the
last year of the lease. (d) Environmental Bonding in Ghana- During 2004 the Ghana Environmental Protection Agency
requested that we provide cash collateralized environmental reclamation bonds for both
Bogoso/Prestea and Wassa. While the Environmental Protection Agency has not specified the exact
amount of the required bonds, we expect, based on our cost estimates for required future
reclamation spending, that the bonds will be approximately $9.0 million for Bogoso/Prestea and
approximately $3.9 million for Wassa. We plan to fund these obligations with a combination of cash
on hand and letters of credit. (e) Royalties - (i) Dunkwa Properties: As part of the acquisition of the Dunkwa properties in August 2003,
we agreed to pay the seller a net smelter return royalty on future gold production from the
Mansiso and Asikuma properties, excluding any royalty on the first 200,000 ounces produced from
Mampon which is located on the Asikuma property. The amount of the royalty is based on a sliding
scale which ranges from 2% of net smelter return at gold prices of or below $300 per ounce up to
3.5% for gold prices in excess of $400 per ounce. (ii) Government of Ghana: Under the laws of Ghana, a holder of a mining lease is required to
pay an annual royalty of not less than 3% and not more than 12% of the total revenues earned
from the lease area. The royalty is payable on a quarterly basis. We currently pay a 3% annual
royalty on gold production from Bogoso/Prestea and expect to pay a royalty at a similar rate on
Wassa production. The Government of Ghana retains the right to increase the amount of the
royalty to as much as 12% based upon a formula related to a companys operating margin. 17




---



##### 



(f) Wassa
Construction Contract -We entered into a contract with Metallurgical Design and
Management (Pty) Ltd. (MDM), a South African company, in July 2003, for the construction of the
CIL processing plant facility and other associated processing facilities at Wassa. By the end of
2004 substantially all construction work had been completed at Wassa, except for the completion of
the power line, and the contract with MDM was terminated and no further payments are due them. (g) Mano
River Joint Venture -We entered into a joint venture agreement in late 2003 to invest up
to $6 million over four years in the Mano River project in Sierra Leone via an earn-in agreement
with a junior exploration company which holds a group of gold exploration properties in Sierra
Leone. The initial $6 million, if fully funded (we can terminate the agreement after spending $1.0
million) would yield a 51% interest in the joint venture. Further provisions of the joint venture
agreement provide the opportunity to acquire up to 85% of the joint venture by continued long term
funding. The joint venture agreement is subject to completion of documentation. Spending during
2003 was nil. Spending in 2004 totaled $0.8 million leaving $0.2 million left on our minimum
commitment to the project. (h) Mininko
Joint Venture -In late 2003 we entered into a joint venture agreement, agreeing to
fund exploration work on the Mininko gold property in Mali. Funding of $2.6 million would earn a
51% interest in the joint venture. We can terminate the joint venture after spending $0.4 million
of which $0.1 million was spent in 2003. Spending during 2004 totaled $0.9 million. The joint
venture agreement provides that we can earn up to an 82.5% interest by continued funding of
exploration and development, if warranted. 15. Warrants At December 31, 2004, there were two series of warrants outstanding to purchase a total of 8.8
million common shares. Of the total, 8.4 million were issued during 2003 and 0.4 million were
issued during 2002 as follows: Warrants
    
    
    
    Exercise
    
    
    
    
    
    
    ExpirationType:
    
    
    Date issued
    
    
    outstanding
    
    
    
    price
    
    
    
    Term
    
    
    dateBroker warrants
    
    
    July 24, 2002
    
    
    
    385,000
    
    
    
    Cdn$2.28
    
    
    2 years(1)
    
    
    July 24, 2005Equity offering
    
    
    February 14, 2003
    
    
    
    8,448,334
    
    
    
    Cdn$4.60
    
    
    4 years
    
    

February 14, 2007Total
    
    
    
    
    
    
    8,833,334
  (1)
    
    The July 24, 2002 broker warrants are exercisable during a two-year period ending July 24,
2005. During 2004, 8.5 million warrants were exercised resulting in cash proceeds of $14.3 million
to Golden Star. The warrants issued in conjunction with the February 14, 2003 equity offering are traded on the
Toronto Stock Exchange under the symbol GSC.WT.A. There is no public market for the broker
warrants. 16. Stock Based Compensation (a) Stock
Options -We have one stock option plan, the 1997 Stock Option Plan, as amended (the
GSR Plan) and options are granted under this plan from time to time at the discretion of the
Compensation Committee. Options granted are non-assignable and are exercisable for a period of ten
years or such other period as stipulated in a stock option agreement between Golden Star and the
optionee. Under the GSR Plan, we may grant options to employees, consultants and directors of the
Company or its subsidiaries for up to 15,000,000 shares of common stock. Options take the form of
non-qualified stock options, and the exercise price of each option is not less than the market
price of our stock on the date of grant. Options typically vest over periods ranging from
immediately to four years from the date of grant. Vesting periods are determined at the discretion
of the Compensation Committee. 18




---



##### 



The following tables summarize information about options under the GSR Plan: 2004
    
    
    
    2003
    
    
    
    
    
    
    
    
    2002Weighted-
    
    
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    Weighted-Shares
    
    
    
    Exercise Price
    
    
    
    Shares
    
    
    
    Exercise Price

    
    
    
    Shares
    
    
    
    Average ExerciseGSR Plan
    
    
    (000s)
    
    
    
    (Cdn$)
    
    
    
    (000s)
    
    
    
    (Cdn$)
    
    
    
    (000s)
    
    
    
    Price (Cdn$)Outstanding at
beginning of year
    
    
    
    5,241
    
    
    
    
    2.41
    
    
    
    
    4,489
    
    
    
    
    1.36
    
    
    
    
    4,595
    
    
    
    
    1.42Granted
    
    
    
    855
    
    
    
    
    6.95
    
    
    
    
    2,354
    
    
    
    
    3.99
    
    
    
    
    640
    
    
    
    
    1.17Exercised
    
    
    
    (767
    )
    
    
    
    2.12
    
    
    
    
    (1,518
    )
    
    
    
    1.73
    
    
    
    
    (548
    )
    
    
    
    1.49Forfeited
    
    
    
    (58
    )
    
    
    
    4.31
    
    
    
    
    (84
    )
    
    
    
    2.92
    
    
    
    
    (198
    )
    
    
    
    1.76Outstanding at end
of year
    
    
    
    5,271
    
    
    
    
    3.17
    
    
    
    
    5,241
    
    
    
    
    2.41
    
    
    
    
    4,489
    
    
    
    
    1.36Options vested and
exercisable at
year-end
    
    
    
    4,140
    
    
    
    
    2.54
    
    
    
    
    3,803
    
    
    
    
    1.81
    
    
    
    
    4,006
    
    
    
    
    1.40Weighted-average
fair value of
options granted
during the year
    
    
    
    
    
    
    
    
    2.45
    
    
    
    
    
    
    
    
    
    1.25
    
    
    
    
    
    
    
    
    
    0.86
 Options Outstanding
    
    
    
    Options ExercisableNumber
    
    
    
    Weighted-
    
    
    
    
    
    
    
    
    NumberOutstanding at
    
    
    
    Average
    
    
    
    Weighted-
    
    
    
    Exercisable at
    
    
    
    Weighted-December 31,
    
    
    
    Remaining
    
    
    
    Average
    
    
    
    December 31,
    
    
    
    Average2004
    
    
    
    Contractual Life
    
    
    
    Exercise Price
    
    
    
    2004
    
    
    
    Exercise PriceGSR Plan Range of Exercise Prices (Cdn$)
    
    
    (000s)
    
    
    
    (years)
    
    
    
    (Cdn$)
    
    
    
    (000s)
    
    
    
    (Cdn$)1.00 to 2.50
    
    
    
    2,869
    
    
    
    
    5.6
    
    
    
    
    1.39
    
    
    
    
    2,794
    
    
    
    
    1.362.51 to 4.00
    
    
    
    1,162
    
    
    
    
    8.2
    
    
    
    
    3.46
    
    
    
    
    757
    
    
    
    
    3.384.01 to 7.00
    
    
    
    1,026
    
    
    
    
    9.3
    
    
    
    
    6.65
    
    
    
    
    482
    
    
    
    
    6.637.01 to 10.00
    
    
    
    214
    
    
    
    
    8.9
    
    
    
    
    8.83
    
    
    
    
    107
    
    
    
    
    8.83All
options
    
    
    
    5,271
    
    
    
    
    7.1
    
    
    
    
    3.17
    
    
    
    
    4,140
    
    
    
    
    2.54
 Options granted during 2004: Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total FairDate
    
    
    Options
    
    
    
    Strike Price
    
    
    
    Fair Value per
    
    
    
    Value
    
    
    
    OptionGranted
    
    
    (000s)
    
    
    
    (Cdn$)
    
    
    
    option (Cdn$)
    
    
    
    (000s of Cdn$)
    
    
    
    LifeMay 14, 2004
    
    
    
    855
    
    
    
    
    6.95
    
    
    
    
    2.45
    
    
    
    
    2,094
    
    
    
    10 yearsTotal
    
    
    
    855
    
    
    
    
    6.95
    
    
    
    
    2.45
    
    
    
    
    2,094
    
    
    
    10 years
 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 years
 19




---



##### 



Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total FairDate
    
    
    Options
    
    
    
    Strike Price
    
    
    
    Fair Value per
    
    
    
    Value
    
    
    
    OptionGranted
    
    
    (000s)
    
    
    
    (Cdn$)
    
    
    
    option (Cdn$)
    
    
    
    (000s of Cdn$)
    
    
    
    LifeDecember 18, 2003
    
    
    
    182
    
    
    
    
    9.07
    
    
    
    
    2.67
    
    
    
    
    486
    
    
    
    10 yearsTotal
    
    
    
    2,354
    
    
    
    
    3.99
    
    
    
    
    1.25
    
    
    
    
    2,937
    
    
    
    10 years
 The fair value of options granted during 2004, 2003 and 2002 were estimated at the grant dates
using the Black-Scholes option-pricing model with the following weighted average assumptions: 2004
    
    
    2003
    
    
    2002Expected volatility
    
    
    36%
    
    
    34%
    
    
    89% to 102%Risk-free interest rate
    
    
    3.72% - 4.06%
    
    
    3.01% - 4.46%
    
    
    3.68% - 4.47%Expected lives
    
    
    3.5 to 5 years
    
    
    3.5 to 5 years
    
    
    5 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 we adopted the new provision of CICA 3870 in 2003.
As a result, we recognized stock based compensation expense of approximately $1.4 million and $1.0
million in 2004 and 2003 respectively for stock options granted during 2004 and 2003. During 2003
approximately $0.5 million of the total option expense was included in mining operations expense. Prior to 2003 we did not recognize compensation costs related to stock options granted. Had
compensation costs been recognized for options vesting in 2002, our net income and earnings per
share would have been reduced to the pro forma amounts shown below: 2004
    
    
    
    2003
    
    
    
    2002Net income
    
    
    As reported
    
    
    $
    2,642
    
    
    
    $
    21,956
    
    
    
    $
    4,856Pro forma
    
    
    $
    2,633
    
    
    
    $
    21,882
    
    
    
    $
    4,339Net income per share
    
    
    As reported
    
    
    $
    0.019
    
    
    
    $
    0.198
    
    
    
    $
    0.067Pro forma
    
    
    $
    0.019
    
    
    
    $
    0.197
    
    
    
    $
    0.060
 (b) Stock
Bonus Plan -In December 1992, we established an Employees Stock Bonus Plan (the
Bonus Plan) for any full-time or part-time employee (whether or not a director) of the Company or
any of our subsidiaries who has rendered meritorious services which contributed to the success of
the Company or any of its subsidiaries. The Bonus Plan provides that a specifically designated
committee of the Board of Directors may grant bonus common shares on terms that it might determine,
within the limitations of the Bonus Plan and subject to the rules of applicable regulatory
authorities. The Bonus Plan, as amended, provided for the issuance of 900,000 common shares of
bonus stock of which 445,820 common shares have been issued as of December 31, 2004. During 2004, 2003 and 2002 a total of nil, 57,200 and 107,000 common shares respectively were
issued to employees pursuant to the Bonus Plan. We recognized compensation expense related to
bonuses under the Bonus Plan during 2004, 2003 and 2002 of nil, $117,800 and $78,000. 17. Income Taxes We recognize future tax assets and liabilities based on the difference between the financial
reporting and tax basis of assets and liabilities using the enacted tax rates expected to be in
effect when the taxes are paid or recovered. We provide a valuation allowance against future tax
assets for which we do not consider realization of such assets to meet the required more likely
than not standard. 20




---



##### 



Our future tax assets and liabilities at December 31, 2004 and 2003 include the following
components: (in thousands)
    
    
    2004
    
    
    
    2003Future tax assets:Offering costs
    
    
    $
    2,218
    
    
    
    $
    2,835Loss carryovers
    
    
    
    59,795
    
    
    
    
    62,745Mine property costs
    
    
    
    18,132
    
    
    
    
    16,366Valuation allowance
    
    
    
    (64,399
    )
    
    
    
    (66,222
    )Future tax assets
    
    
    $
    15,746
    
    
    
    $
    15,724Future tax liabilities:Mine property costs
    
    
    $
    13,805
    
    
    
    $
    15,724Reclamation costs
    
    
    
    399
    
    
    
    
    Deferred tax liabilities
    
    
    $
    14,204
    
    
    
    $
    15,724Net future tax asset
    
    
    $
    1,542
    
    
    
    $
    0
 The composition of our
valuation allowance is
summarized as follows: (in thousands)
    
    
    2004
    
    
    
    2003Canada
    
    
    $
    32,756
    
    
    
    $
    31,826France
    
    
    
    26,141
    
    
    
    
    27,065Ghana
    
    
    
    5,502
    
    
    
    
    7,331Total Valuation Allowance
    
    
    $
    64,399
    
    
    
    $
    66,222
 During 2004, we reduced the valuation allowance by $1.5 million. This allowance was related to our
net future tax assets in Ghana. A reconciliation of expected income tax on net income before minority interest at statutory rates
with the actual expenses (recovery) for income taxes is as follows: 2004
    
    
    
    2003
    
    
    
    2002Net income before minority interest
    
    
    $
    2,377
    
    
    
    $
    24,533
    
    
    
    $
    5,694Statutory tax rate
    
    
    
    32.1
    %
    
    
    
    34.1
    %
    
    
    
    36.1
    %Tax expense (recovery) at statutory rate
    
    
    
    763
    
    
    
    
    8,365
    
    
    
    
    2,057Enacted future tax rate reductions
    
    
    
    
    
    
    
    
    (490
    )
    
    
    
    (228
    )Foreign tax rates
    
    
    
    (152
    )
    
    
    
    (6,489
    )
    
    
    
    (797
    )Change in tax rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,870Nondeductible portion of capital losses
    
    
    
    3,174
    
    
    
    
    
    
    
    
    
    Expired loss carryovers
    
    
    
    1,450
    
    
    
    
    2,866
    
    
    
    
    1,861Ghana investment allowance
    
    
    
    (316
    )
    
    
    
    (636
    )
    
    
    
    (339
    )Nondeductible stock option compensation
    
    
    
    445
    
    
    
    
    129
    
    
    
    
    Nondeductible expenses
    
    
    
    119
    
    
    
    
    
    
    
    
    
    Tax loss on sale of Guyanor shares
    
    
    
    (2,898
    )
    
    
    
    
    
    
    
    
    Loss carryover not previously recognized
    
    
    
    4,447
    
    
    
    
    
    
    
    
    
    (9,766
    )Ghana property basis not previously recognized
    
    
    
    (2,733
    )
    
    
    
    716
    
    
    
    
    (5,571
    )Change in future tax assets due to exchange rates
    
    
    
    (3,919
    )
    
    
    
    (8,283
    )
    
    
    
    (3,214
    )Change in valuation allowance
    
    
    
    (1,922
    )
    
    
    
    3,822
    
    
    
    
    10,127Income tax expense (recovery)
    
    
    $
    (1,542
    )
    
    
    $
    
    
    
    
    $
    
 21




---



##### 



During 2004, 2003 and 2002,
we recognized $0.3 million, $6.4 million and $2.6 million, respectively,
of share offering costs. Shareholders equity has been credited in the amounts of $0.1 million,
$2.1 million and $0.8 million for the tax benefits of these deductions; however a valuation
allowance had been provided against their full amount. The $1.5 million provision for taxes is a deferred foreign provision. At December 31, 2004 we had loss carryovers expiring as follows: Canada
    
    
    
    Ghana
    
    
    
    France2005
    
    
    $
    10,187
    
    
    
    $
    
    
    
    
    $
    2006
    
    
    
    2,508
    
    
    
    
    
    
    
    
    
    2007
    
    
    
    344
    
    
    
    
    
    
    
    
    
    2008
    
    
    
    1,837
    
    
    
    
    
    
    
    
    
    2009
    
    
    
    2,265
    
    
    
    
    
    
    
    
    
    2010
    
    
    
    1,134
    
    
    
    
    
    
    
    
    
    2011
    
    
    
    6,723
    
    
    
    
    
    
    
    
    
    Indefinite
    
    
    
    39,583
    
    
    
    
    65,377
    
    
    
    
    73,215Total
    
    
    $
    64,582
    
    
    
    $
    65,377
    
    
    
    $
    73,215
 18. Earnings per Common Share The following table provides a reconciliation between basic and diluted earnings per common share: For the years ended December 31,2004
    
    
    
    2003
    
    
    
    2002Net Income/(Loss)
    
    
    $
    2,642
    
    
    
    $
    21,956
    
    
    
    $
    4,856Shares (in millions)Weighted average number of common shares
    
    
    
    138.3
    
    
    
    
    111.0
    
    
    
    
    72.4Dilutive Securities:Options
    
    
    
    2.9
    
    
    
    
    2.7
    
    
    
    
    1.6Warrants
    
    
    
    2.5
    
    
    
    
    4.2
    
    
    
    
    2.7Weighted average number of dilutive common shares
    
    
    
    143.7
    
    
    
    
    117.9
    
    
    
    
    76.7Basic Income/(Loss) Per Common Share
    
    
    $
    0.019
    
    
    
    $
    0.198
    
    
    
    $
    0.067Diluted Income/(Loss) Per Common Share
    
    
    $
    0.018
    
    
    
    $
    0.186
    
    
    
    $
    0.063
 19. Supplemental Cash Flow Information The following is a summary of non-cash transactions: For the years ended December 31,2004
    
    
    
    2003
    
    
    
    2002Investing:Prestea acquisition costs paid with common shares
    
    
    $
    
    
    
    
    $
    
    
    
    
    $
    (400
    )Common shares issued for Prestea acquisition cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    400Receivable on sale of property
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,000
    )Acquisition, deferred exploration and development
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000Wassa property acquisitionProperty, plant and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,120
    )
 22




---



##### 



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

    
    Bogoso/
    
    
    
    
    
    
    
    
    
    
    Souththe year ended)

    
    Prestea
    
    
    Wassa
    
    
    Other
    
    
    America
    
    
    Corporate
    
    
    Total2004Revenues
    
    $
    61,002
    
    
    $
    
    
    
    $
    
    
    
    $
    3,145
    
    
    $
    882
    
    
    $
    65,029Net Income/(Loss)
    
    
    12,533
    
    
    
    (168
    )
    
    
    
    
    
    
    1,772
    
    
    
    (11,495
    )
    
    
    2,642Total Assets
    
    
    90,297
    
    
    
    70,681
    
    
    
    31,080
    
    
    
    817
    
    
    
    59,285
    
    
    
    252,1602003Revenues
    
    $
    63,640
    
    
    $
    
    
    
    $
    
    
    
    $
    102
    
    
    $
    628
    
    
    $
    64,370Net Income/(Loss)
    
    
    23,253
    
    
    
    (171
    )
    
    
    
    
    
    
    (1,411
    )
    
    
    285
    
    
    
    21,956Total Assets
    
    
    64,828
    
    
    
    44,523
    
    
    
    20,058
    
    
    
    352
    
    
    
    92,630
    
    
    
    222,3912002Revenues
    
    $
    38,199
    
    
    $
    
    
    
    $
    
    
    
    $
    466
    
    
    $
    137
    
    
    $
    38,802Net Income/(Loss)
    
    
    8,089
    
    
    
    
    
    
    
    
    
    
    
    (1,106
    )
    
    
    (2,127
    )
    
    
    4,856Total Assets
    
    
    36,585
    
    
    
    10,434
    
    
    
    3,688
    
    
    
    189
    
    
    
    23,239
    
    
    
    74,135
 21. Related Parties During 2004 we obtained legal services from a legal firm to which our Chairman is of counsel. Total
cost of all services purchased during 2004 was $1.7 million. Our Chairman did not personally
perform any legal services for us during 2004 nor did he benefit directly or indirectly from
payments for the services performed by the firm. 23




---



##### 



22. Generally Accepted Accounting Principles in Canada and the United States Our consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in Canada, which differ from US GAAP. The effect of applying US GAAP to our
financial statements is shown below. (a) Balance Sheets Under US GAAP
    
    
    As of December 31,2004
    
    
    2003ASSETSCurrent assets:Cash and short term investments
    
    
    $
    51,727
    
    
    
    $
    89,970Accounts receivable
    
    
    
    3,592
    
    
    
    
    790Inventories
    
    
    
    15,366
    
    
    
    
    12,661Due from sale of property
    
    
    
    1,000
    
    
    
    
    1,000Current tax asset
    
    
    
    1,542
    
    
    
    
    Deposits
    
    
    
    5,102
    
    
    
    
    Prepaids
    
    
    
    517
    
    
    
    
    514Total current assets
    
    
    
    78,846
    
    
    
    
    104,935Restricted cash
    
    
    
    3,351
    
    
    
    
    3,317Due from sale of property
    
    
    
    
    
    
    
    
    1,000Long term investments
    
    
    
    4,132
    
    
    
    
    Deferred exploration and development costs (Note 2)
    
    
    
    
    
    
    
    
    Property, plant and equipment, net
    
    
    
    28,653
    
    
    
    
    18,202Mining property (Note 3)
    
    
    
    52,586
    
    
    
    
    46,478Mine construction in progress
    
    
    
    49,430
    
    
    
    
    25,647Deferred
stripping
    
    
    
    1,357
    
    
    
    
    Other assets
    
    
    
    1,617
    
    
    
    
    758Total Assets
    
    
    $
    219,972
    
    
    
    $
    200,337Current liabilities
    
    
    $
    17,480
    
    
    
    $
    8,151Long term debt
    
    
    
    1,707
    
    
    
    
    657Asset retirement obligations (Note 4)
    
    
    
    8,660
    
    
    
    
    7,745Total Liabilities
    
    
    
    27,847
    
    
    
    
    16,553Minority interest (Notes 2 and 3)
    
    
    
    3,899
    
    
    
    
    3,367Share capital (Note 6)
    
    
    
    339,524
    
    
    
    
    323,654Contributed capital
    
    
    
    2,040
    
    
    
    
    955Accumulated comprehensive income (Note 1)
    
    
    
    1,316
    
    
    
    
    1,316Deficit (Note 4)
    
    
    
    (154,654
    )
    
    
    
    (145,508
    )Total Shareholders Equity
    
    
    
    188,226
    
    
    
    
    180,417Total Liabilities and Shareholders Equity
    
    
    $
    219,972
    
    
    
    $
    200,337
 (b) Statements of Operations under US GAAP
    
    
    For the Years ended December 31,2004
    
    
    2003
    
    
    2002Net income under Cdn GAAP
    
    
    $
    2,642
    
    
    
    $
    21,956
    
    
    
    $
    4,856Deferred exploration expenditures expensed per US GAAP (Note 2)
    
    
    
    (5,735
    )
    
    
    
    (5,252
    )
    
    
    
    (529
    )Gain on sale of exploration property (Note 5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,066Effect of mining property depletion
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capitalized mine property acquisition costs expensed for US GAAP (Note 3)
    
    
    
    (6,799
    )
    
    
    
    (4,763
    )
    
    
    
    (7,246
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )Net income/(loss) under US GAAP before minority interest
    
    
    
    (9,892
    )
    
    
    
    11,941
    
    
    
    
    5,140Minority interest, as adjusted (Notes 2 and 3)
    
    
    
    746
    
    
    
    
    933
    
    
    
    
    1,612Net income/(loss) under US GAAP before cumulative effect of change in
accounting method
    
    
    
    (9,146
    )
    
    
    
    12,874
    
    
    
    
    6,752Cumulative effect of change in accounting method (Note 4)
    
    
    
    
    
    
    
    
    483
    
    
    
    
    Net Income/(loss) under US GAAP
    
    
    
    (9,146
    )
    
    
    
    13,357
    
    
    
    
    6,752Other comprehensive income  gain on marketable securities (Note 1)
    
    
    
    
    
    
    
    
    (548
    )
    
    
    
    548Comprehensive income/(loss)
    
    
    $
    (9,146
    )
    
    
    $
    12,809
    
    
    
    $
    7,300Basic net income/(loss) per share under US GAAP before cumulative
effect of change in accounting method
    
    
    $
    (0.066
    )
    
    
    $
    0.116
    
    
    
    $
    0.093Cumulative effect of change in accounting method
    
    
    
    
    
    
    
    
    0.004
    
    
    
    
    Basic net income/(loss) per share under US GAAP after cumulative effect
of change in accounting method
    
    
    $
    (0.066
    )
    
    
    $
    0.120
    
    
    
    $
    0.093Diluted net income/(loss) per share under US GAAP before cumulative
effect of change in accounting method
    
    
    $
    (0.066
    )
    
    
    $
    0.109
    
    
    
    $
    0.088Cumulative effect of change in accounting method
    
    
    
    
    
    
    
    
    0.004
    
    
    
    
    Diluted net income/(loss) per share under US GAAP after cumulative
effect of change in accounting method
    
    
    $
    (0.066
    )
    
    
    $
    0.113
    
    
    
    $
    0.088
 24




---



##### 



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




---



##### 



(3) Under US GAAP, the initial purchase cost of mining properties is capitalized. Pre-acquisition
costs and subsequent development costs incurred, until such time as a final feasibility study is
completed, are expensed in the period incurred. Under Cdn GAAP, the purchase costs of new mine properties as well as all
development costs incurred after acquisition are capitalized and subsequently reviewed each period
for impairment. If found impaired, the assets cost basis is reduced in accordance with Cdn GAAP
provisions. (4) Under US GAAP the cumulative effect of applying SFAS 143 Accounting for Asset Retirement
Obligations in January 2003 is included in net income for the period. In Cdn GAAP, under CICA
3110 Asset Retirement Obligations, the cumulative effect of the application of this new standard
was recorded as an adjustment to beginning deficit account. (5) The US GAAP basis in the Rosebel deferred exploration had been expensed in prior periods. Thus
under US GAAP the full amount of the sales price was a gain. In Cdn GAAP, this propertys basis
approximated the sales price and thus there was no material impact on the statement of operations
from the sale. (6) Numerous transactions since the Companys organization in 1992 have contributed to the
difference in share capital versus the Canadian GAAP balance, including: i.) under US GAAP,
compensation expense was recorded for the difference between quoted market prices and the strike
price of options granted to employees and directors under stock option plans  under Canadian GAAP,
recognition of compensation expense was not required; ii.) in May 1992 our accumulated deficit was
eliminated through an amalgamation (defined as a quasi-reorganization
under US GAAP) - under US
GAAP the cumulative deficit was greater than the deficit under Canadian GAAP due to the past
write-offs of certain deferred exploration costs; iii.) gains recognized in Canadian GAAP upon
issuances of subsidiaries shares were not allowed under US GAAP; and iv.) Canadian GAAP requires
that convertible debentures be classified into its component parts as liability and equity  under
US GAAP convertible debentures are classified entirely as debt. (e) Impact of Recently Issued Accounting Standards The adoption of the following recent accounting pronouncements did not have any impact on our
results of operations and financial condition:  
    FASB Interpretation No. 46(R) (FIN 46R), Consolidation of Variable Interest
Entities-An Interpretation of ARB No. 51.  
    EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments. In November 2004, the
FASB issued SFAS No. 151, Inventory CostsAn Amendment of ARB No. 43,
Chapter 4 (SFAS 151). SFAS 151 amends the guidance in ARB No. 43, Chapter 4, Inventory
Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material (spoilage). Among other provisions, the new rule requires that
items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be
recognized as current-period charges regardless of whether they meet the criterion of so abnormal
as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of the production facilities.
SFAS 151 is effective for fiscal years beginning after June 15, 2005 and is required to be adopted
by us in the first quarter of fiscal 2006, beginning on January 1, 2006. We are currently
evaluating the effect that the adoption of SFAS 151 will have on our consolidated results of
operations and financial condition but we do not expect SFAS 151 to have a material impact. In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment (SFAS
123R), which replaces SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123) and
supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123R requires all
share-based payments to employees, including grants of employee stock options, to be recognized in
the financial statements based on their fair values beginning with the first interim or annual
period after June 15, 2005, with early adoption encouraged. The pro forma disclosures previously
permitted under SFAS 123 no longer will be an alternative to financial statement 26




---



##### 



recognition. We adopted a policy of
recognizing the cost of stock options at the beginning of 2003 and as a result
anticipate no impact on our consolidated results of operations and financial condition when
Share-Based Payment (SFAS 123R) becomes effective. In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary AssetsAn
Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions (SFAS 153). SFAS 153
eliminates the exception from fair value measurement for nonmonetary exchanges of similar
productive assets in paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary
Transactions, and replaces it with an exception for exchanges that do not have commercial
substance. SFAS 153 specifies that a nonmonetary exchange has commercial substance if the future
cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153
is effective for the fiscal periods beginning after June 15, 2005. We will adopt SFAS 153 in the
first quarter of 2006. We are currently evaluating the effect that the adoption of SFAS 153 will
have on our consolidated results of operations and financial condition but do not expect it to have
a material impact. 23. Quarterly Financial
Data - Unaudited First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Total2004Net Sales
    
    $
    19,857
    
    
    $
    16,494
    
    
    $
    13,445
    
    
    $
    15,233
    
    
    $
    65,029Gross Profit
    
    
    8,061
    
    
    
    3,975
    
    
    
    1,029
    
    
    
    3,233
    
    
    
    16,298Net Income/(Loss)
    
    
    5,194
    
    
    
    1,115
    
    
    
    (4,258
    )
    
    
    591
    
    
    
    2,642Basic Earning/(Loss) Per
Common Share
    
    $
    0.039
    
    
    $
    0.008
    
    
    $
    (0.030
    )
    
    $
    0.004
    
    
    $
    0.0192003Net Sales
    
    $
    15,141
    
    
    $
    12,693
    
    
    $
    18,801
    
    
    $
    17,735
    
    
    $
    64,370Gross Profit
    
    
    5,572
    
    
    
    3,434
    
    
    
    7,838
    
    
    
    9,236
    
    
    
    26,080Net Income
    
    
    3,984
    
    
    
    3,993
    
    
    
    6,095
    
    
    
    7,884
    
    
    
    21,956Basic Earning Per Common Share
    
    $
    0.041
    
    
    $
    0.037
    
    
    $
    0.053
    
    
    $
    0.063
    
    
    $
    0.1982002Net Sales
    
    $
    9,332
    
    
    $
    9,699
    
    
    $
    8,350
    
    
    $
    11,421
    
    
    $
    38,802Gross Profit
    
    
    2,447
    
    
    
    2,954
    
    
    
    1,762
    
    
    
    1,948
    
    
    
    9,111Net Income
    
    
    1,454
    
    
    
    1,557
    
    
    
    834
    
    
    
    1,011
    
    
    
    4,856Basic Earning Per Common Share
    
    $
    0.024
    
    
    $
    0.024
    
    
    $
    0.010
    
    
    $
    0.009
    
    
    $
    0.067
 27




---



##### 



ITEM 9A CONTROLS AND PROCEDURES We carried out an evaluation, under the supervision and with the participation of our principal
executive officer and principal financial officer, of the effectiveness of our disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the
period covered by this report. Based on this evaluation, the principal executive officer and
principal financial officer have concluded that our disclosure controls and procedures are
effective. There have been no significant changes in our internal control over financial reporting during the
most recent fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting. Managements report on internal control over financial reporting and the attestation report of
PricewaterhouseCoopers LLP, our registered public accounting firm, are included in Item 8 of this
Annual Report on Form 10-K/A. PART IV ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a)
    
    The following documents are filed as part of this Report:1. Financial Statements  
    Managements Responsibility for Financial Information
and Report On Internal Control Over Financial Reporting
    Report of Independent Registered Public Accounting Firm
    Consolidated Balance Sheets as of December 31, 2004 and 2003
    Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002
    Consolidated Statements of Changes in Shareholders Equity for the years ended December 31, 2004, 2003 and 2002
    Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002
    Notes to the Consolidated Financial Statements 2. Financial Statement SchedulesFinancial Statement schedules have been omitted since they are either not required, are not
applicable, or the required information is shown in the financial statements or related
notes.(b)
    
    Exhibits
 3
    (i)
    
    Incorporating Documents of the Company, including: Articles
of Arrangement dated May 14, 1992, with Plan of Arrangement
attached, with Certificate of Amendment with respect thereto
dated May 15, 1992; Certificate of Amendment dated May 15,
1992, with Articles of Amendment; Certificate of Amendment
dated March 26, 1993, with Articles of Amendment; Articles
of Arrangement dated March 7, 1995, with Plan of Arrangement
attached, with Certificate of Amendment with respect thereto
dated March 14, 1995; Certificate of Amendment dated July
29, 1996, with Articles of Amendment; and Certificate of
Amendment dated July 10, 2002, with Articles of Amendment
(all incorporated by reference to Exhibit 4.1 to the
Companys Form 8-K filed on January 23, 2003)3(ii)
    
    Bylaws of the Company, including: Bylaw Number One, amended
and restated as of April 3, 2002 (incorporated by reference
to Exhibit 4.3 to the Companys Registration Statement on
Form S-3 (Reg. No. 333-102225) filed on December 27, 2002);
Bylaw Number Two, effective May 15, 1992 (incorporated by
reference to Exhibit 4.2 to the Companys Form 8-K filed on
January 23, 2003); and Bylaw Number Three, effective May 15,
1992 (incorporated by reference to Exhibit 4.2 to the
Companys Form 8-K filed on January 23, 2003)
 28




---



##### 



4.1
    
    
    Form of Specimen Certificate for Common Shares (incorporated
by reference to Exhibit 4.1 to the Companys Registration
Statement on Form S-3/A (Reg. No. 333-91666) filed on July
15, 2002)4.2
    
    
    Amended and Restated Shareholders Rights Plan dated as of
May 20, 2004 between the Company and CIBC Mellon Trust
Company, as rights agent (incorporated by reference to
Exhibit 4.1 to the Companys Form 8-K filed June 3, 2004)4.7
    
    
    Form of Underwriters Warrants (incorporated by reference to
Exhibit 4.3 to the Companys Registration Statement on Form
S-3/A (Reg. 333-91666) filed on July 15, 2002)4.9
    
    
    Warrant Indenture, dated as of February 14, 2003, between
the Company and CIBC Mellon Trust Company, including the
Form of Warrant (incorporated by reference to Exhibit 4.1 of
the Companys Form 8-K filed on February 14, 2003)4.10
    
    
    Form of Underwriters Warrant, dated February 14, 2003
(incorporated by reference to Exhibit 4.2 of the Companys
Form 8-K filed on February 14, 2003)10.1
    
    
    Summary of Executive Management Performance Bonus Plan
(incorporated by reference to Exhibit 10.1 of the Companys
Form 8-K filed on January 23, 2003)10.2
    
    
    Second Amended and Restated 1997 Stock Option Plan,
effective as of April 8, 2004 (incorporated by reference to
Exhibit 10.2 to the Companys Form 10-K for the year ended
December 31, 2004)10.3
    
    
    Form of Indemnification Agreement between the Company and
its officers and directors (incorporated by reference to
Exhibit 10.3 of the Companys Form 8-K filed on January 23,
2003)10.4
    
    
    Summary of Severance Arrangements between the Company and
certain executive officers (incorporated by reference to
Exhibit 10.4 of the Companys Form 8-K filed on January 23,
2003)10.5
    
    
    Employees Stock Bonus Plan amended and restated to April 6,
2000 (incorporated by reference to Exhibit 10(j) to the
Companys Form 10-K for the year ended December 31, 2000)10.6
    
    
    Guyanor Ressources S.A. Stock Option Plan amended and
restated as of June 15, 1999 (English translation)
(incorporated by reference to Exhibit 10.35(a) to the
Companys Form 10-K for the year ended December 31, 1999)10.7
    
    
    Amended and Restated Employment Agreement with Mr. Peter
Bradford dated April 30, 2004 (incorporation by reference to
Exhibit 10.7 to the Companys Form 10-K for the year ended
December 31, 2004); Letter Agreement amending Mr. Bradfords
Amended and Restated Employment Agreement dated February 3,
200510.8
    
    
    Amended and Restated Employment Agreement with Mr. Allan J.
Marter dated April 30, 2004 (incorporation by reference to
Exhibit 10.8 to the Companys Form 10-K for the year ended
December 31, 2004)10.9
    
    
    Amended and Restated Employment Agreement with Dr. Douglas
Jones dated April 30, 2004 (incorporation by reference to
Exhibit 10.9 to the Companys Form 10-K for the year ended
December 31, 2004)
 29




---



##### 



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




---



##### 



21
    
    
    Subsidiaries of the Company (incorporated by reference to
Exhibit 21 to the Companys Form 10-K for the year ended
December 31, 2004)23.1
    
    
    Consent of PricewaterhouseCoopers LLP23.2
    
    
    Consent of Colin Jones (incorporated by reference to Exhibit
23.2 to the Companys Form 10-K for the year ended December
31, 2004)31.1
    
    
    Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certificate of Principal Executive Officer pursuant to 18
U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)32.2
    
    
    Certificate of Principal Financial Officer pursuant to 18
U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
 31




---



##### 



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 10-K/A to be signed on its behalf by the
undersigned, thereunto duly authorized. GOLDEN STAR RESOURCES LTD.
RegistrantBy:
    /s/ Peter J. BradfordPeter J. BradfordPresident and Chief Executive Officer Date: April 28, 2005 32




---



##### 



EXHIBIT INDEX

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






---



##### 



10.5
    
    Employees Stock Bonus Plan amended and restated to April 6,
2000 (incorporated by reference to Exhibit 10(j) to the
Companys Form 10-K for the year ended December 31, 2000)10.6
    
    Guyanor Ressources S.A. Stock Option Plan amended and
restated as of June 15, 1999 (English translation)
(incorporated by reference to Exhibit 10.35(a) to the
Companys Form 10-K for the year ended December 31, 1999)10.7
    
    Amended and Restated Employment Agreement with Mr. Peter
Bradford dated April 30, 2004 (incorporation by reference to
Exhibit 10.7 to the Companys Form 10-K for the year ended
December 31, 2004); Letter Agreement amending Mr. Bradfords
Amended and Restated Employment Agreement dated February 3,
200510.8
    
    Amended and Restated Employment Agreement with Mr. Allan J.
Marter dated April 30, 2004 (incorporation by reference to
Exhibit 10.8 to the Companys Form 10-K for the year ended
December 31, 2004)10.9
    
    Amended and Restated Employment Agreement with Dr. Douglas
Jones dated April 30, 2004 (incorporation by reference to
Exhibit 10.9 to the Companys Form 10-K for the year ended
December 31, 2004)10.10
    
    Amended and Restated Employment Agreement with Mr. Bruce
Higson-Smith dated April 30, 2004 (incorporation by
reference to Exhibit 10.10 to the Companys Form 10-K for
the year ended December 31, 2004)10.11
    
    Amended and Restated Employment Agreement with Mr. Richard
Q. Gray dated April 30, 2004 (incorporation by reference to
Exhibit 10.11 to the Companys Form 10-K for the year ended
December 31, 2004)10.12
    
    Agreements between the Company and its outside directors
granting them options to purchase Guyanor Class B common
shares, (1) dated December 8, 1995, and December 10, 1996
(incorporated by reference as Exhibit 10.39 to the Companys
Form 10-K for the year ended December 31, 1996), (2) dated
December 9, 1997 (incorporated by reference to Exhibit
10.39(a) to the Companys Form 10-K for the year ended
December 31, 1997), (3) dated December 8, 1998 (incorporated
by reference to Exhibit 10.39(b) to the Companys Form 10-K
for the year ended December 31, 1998), (4) dated June 15,
1999 (incorporated by reference to Exhibit 10.39(c) to the
Companys Form 10-K for the year ended December 31, 1999),
and (5) dated August 16, 2001 (incorporated by reference to
Exhibit 10.11 to the Companys Form 10-K for the year ended
December 31, 2002)10.22
    
    Agreement, dated November 16, 2001, between Bogoso Gold
Limited and Prestea Gold Resources Limited for the purchase
of Prestea mining lease rights and option payments
(incorporated by reference to Exhibit 10.2 to the Companys
Form 8-K filed on March 6, 2002)10.24
    
    Guiana Shield Transaction Agreement with Cambior Inc. dated
October 25, 2001 for the sale and swap of Golden Stars
interest in Gross Rosebel and other properties (incorporated
by reference to Exhibit 10.3 to the Companys Form 8-K filed
March 6, 2002)10.25
    
    Mining lease, dated June 29, 2001, between the Government of
the Republic of Ghana and Bogoso Gold Limited, relating to
the Prestea property (incorporated by reference to Exhibit
10.1 to the Companys Form 8-K filed on March 6, 2002)10.26
    
    Mining lease, dated September 17, 1992 between the
Government of the Republic of Ghana and Satellite Goldfields
Limited, with letter dated April 25, 2002 from the Ministry
of Mines consenting to assignment to Wexford Goldfields
Limited, relating to the Wassa property




---



##### 



(incorporation by
reference to Exhibit 10.26 to the Companys Form 10-K for
the year ended December 31, 2004)10.27
    
    Mining lease dated June 29, 2001, between the Government of
the Republic of Ghana and Prestea Gold Resources Limited, relating
to the Prestea underground property (incorporation by
reference to Exhibit 10.27 to the Companys Form 10-K for
the year ended December 31, 2004)10.28
    
    Joint Operating Agreement, dated January 31, 2002, between
Bogoso Gold Limited and Prestea Gold Resources Limited
(incorporated by reference to Exhibit 10.25 to the Companys
Form 10-K for the year ended December 31, 2002)10.29
    
    Memorandum of Agreement, dated March 14, 2002, among Prestea
Gold Resources Limited, Bogoso Gold Limited and others (incorporated
by reference to Exhibit 10.26 to the Companys Form 10-K for
the year ended December 31, 2002)10.30
    
    Letter agreement between the Company and Guyanor Ressources
S.A. dated September 30, 2004 relating to sale of Gross
Rosebel Participation Right (incorporation by reference to
Exhibit 10.30 to the Companys Form 10-K for the year ended
December 31, 2004)21
    
    Subsidiaries of the Company (incorporated by reference to
Exhibit 21 to the Companys Form 10-K for the year ended
December 31, 2004)23.1
    
    Consent of PricewaterhouseCoopers LLP23.2
    
    Consent of Colin Jones (incorporated by reference to Exhibit
23.2 to the Companys Form 10-K for the year ended December
31, 2004)31.1
    
    Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certificate of Principal Executive Officer pursuant to 18
U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)32.2
    
    Certificate of Principal Financial Officer pursuant to 18
U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)