GOLDEN STAR RESOURCES LTD - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q

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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.

Commission file number 1-12284

GOLDEN STAR RESOURCES LTD.
(Exact name of registrant as specified in its charter)

CANADA 98-0101955
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

10579 BRADFORD ROAD, SUITE 103
LITTLETON, COLORADO 80127-4247
(Address of principal executive office) (Zip Code)

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

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 [ ]

Number of Common Shares outstanding as of August 1, 2002: 83,100,703

INDEX

Part I Financial Information

Item 1. Financial Statements........................................................................3

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................................................14

Item 3. Quantitative and Qualitative Disclosures about Market Risk.................................18

Part II Other Information

Item 1. Legal Proceedings..........................................................................19

Item 4. Submission of Matters to a Vote of Security Holders........................................19

Item 6. Exhibits and Reports on Form 8-K...........................................................20

Signatures.......................................................................................................21

REPORTING CURRENCY AND FINANCIAL INFORMATION

All amounts in this Report are expressed in United States dollars, unless
otherwise indicated. References to "Cdn" are to Canadian dollars. Financial
information is presented in accordance with accounting principles generally
accepted in Canada ("Cdn GAAP"). Differences between accounting principles
generally accepted in the United States ("US GAAP") and those applied in Canada,
as applicable to the Registrant, are explained in Note 8 to the Consolidated
Financial Statements.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q contains "forward-looking statements" within the meaning of the
United States securities laws. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events, capital
expenditure, exploration efforts, financial needs, and other information that is
not historical information. The forward-looking statements contained herein are
based on Golden Star's current expectations and various assumptions as of the
date such statements are made. Golden Star cannot give assurance that such
statements will prove to be correct. These forward-looking statements include
statements regarding: the impact that mining from Bogoso/Prestea may have on our
future liquidity, cash flows, financial requirements, operating results and
capital resources; the operational and financial performance of mining from
Bogoso/Prestea; targets for gold production; cash operating costs and expenses;
percentage increases and decreases in production from Bogoso/Prestea; schedules
for completion of feasibility studies; potential increases or decreases in
reserves and production; the timing and scope of future drilling and other
exploration activities; expectations regarding receipt of permits and
commencement of mining or production; anticipated recovery rates; and potential
acquisitions or increases in property interests.

Factors that could cause our actual results to differ materially from these
statements include, but are not limited to, changes in gold prices, the timing
and amount of estimated future production, unanticipated grade changes,
unanticipated recovery problems, mining and milling costs, determination of
reserves, costs and timing of the development of new deposits, metallurgy,
processing, access, transportation of supplies, water availability, results of
current and future exploration activities, results of pending and future
feasibility studies, changes in project parameters as plans continue to be
refined, political, economic and operational risks of foreign operations, joint
venture relationships, availability of materials and equipment, the timing of
receipt of governmental approvals for new permits or renewal of permits,
capitalization and commercial viability, the failure of plant, equipment or
processes to operate in accordance with specifications or expectations,
accidents, labor disputes, delays in start-up dates, environmental costs and
risks, local and community impacts and issues, and general domestic and
international economic and political conditions.

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

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

3

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

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

4

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

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

5

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

These consolidated financial statements and the accompanying notes are unaudited
and should be read in conjunction with the audited consolidated financial
statements and related notes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 2001, on file with the Securities and
Exchange Commission and with the Canadian securities commissions (referred to as
"the Company's 2001 Form 10-K").

The unaudited consolidated financial statements for the three months and six
months ended June 30, 2002 and June 30, 2001 contained herein, reflect all
adjustments, consisting solely of normal recurring items, which are necessary
for a fair presentation of financial position, results of operations, and cash
flows, on a basis consistent with that of the prior audited consolidated
financial statements.

1. OPERATIONS

Golden Star Resources Ltd. ("Golden Star", the "Company" or "we") is an
international mining company and gold producer. Since 1999, we have sought to
move from primarily an exploration focus, with operations in several areas in
Africa and South America, to primarily a production focus, concentrating on
operations in Ghana. We own a 90% equity interest in the Bogoso/Prestea open pit
gold mine in Ghana ("Bogoso/Prestea") and a 45% managing interest in the
currently inactive Prestea underground mine both of which are held through our
subsidiary Bogoso Gold Limited ("BGL"). We are also in the process of acquiring
a 90% interest in the Wassa gold project, also in Ghana. In addition we have
interests in several gold exploration properties in French Guiana most of which
are held through our 73%-owned subsidiary, Guyanor Ressources S.A., ("Guyanor").

2. SUPPLEMENTAL CASH FLOW INFORMATION

The following is a summary of non-cash transactions:

3. INVENTORIES

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4. CURRENT AND LONG TERM DEBT

(a) NOTE DUE OMAI GOLD MINES LIMITED ("OMGL")

In December 1998, OGML advanced $3.2 million to us as an unsecured loan to be
repaid as and when Class I preferred shares of OGML held by us are redeemed by
OGML. The loan was non-interest bearing until September 30, 2010. Subsequent
redemption of preferred shares reduced the liability and the final payment was
made on this note in the first quarter of 2002.

(b) AMOUNTS DUE TO THE SELLERS OF BGL

Represents amounts owed to the original Sellers of BGL per terms of the
September 1999 Bogoso purchase agreement. The final installment of $2.9 million
was paid in the first quarter of 2002.

(c) DUE TO A FINANCIAL INSTITUTION

This amount represents gold production related payments due to a financial
institution retained in 1999 to provide bridge financing for the BGL
acquisition. The first payment of $0.25 million, due September 30, 2001, was
made in January 2002, and the second and final payment of $0.25 million is due
September 30, 2002.

(d) OVERDRAFT FACILITY AT BGL

Over-draft facility of BGL from Barclays Bank in Ghana.

(e) BANK LOANS AT BGL

These are term loans from CAL Merchant Bank, Ghana to BGL. One loan of $0.8
million is denominated in Ghanaian cedis, has a six-month repayment holiday and
a two-year maturity. The second loan of $0.8 million is denominated in United
States dollars and has a two-year maturity.

(f) ACCRUAL OF POSSIBLE LIABILITY TO SELLERS

The original BGL purchase agreement of September 1999 included a reserve
acquisition payment due the Sellers. The reserve acquisition payment would be
triggered if minable reserves equivalent to 50,000 ounces of gold or greater
were to be acquired by BGL prior to September 30, 2001 from elsewhere in Ghana
for processing at the Bogoso mill. The acquisition of the surface mining lease
at the Prestea property may have triggered the reserve acquisition payment and
the associated $2.0 million liability. While the Company's liability for this
payment and the exact due date of this liability is yet to be established, the
$2.0 million contingent liability was accrued in the fourth quarter of 2001.

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(g) CONVERTIBLE DEBENTURES

On August 24, 1999, we issued $4.2 million of subordinated convertible
debentures. The debentures mature on August 24, 2004 and bear interest at the
rate of 7.5% per annum from the date of issue, payable semi-annually on February
15 and August 15, to the debenture-holders as of February 1 and August 1,
respectively, commencing on February 15, 2000. The debentures are convertible at
the option of the holder into common shares of Golden Star at a conversion price
of $0.70 per share, prior to the maturity date of August 24, 2004.

During the first six months of 2002, debentures with a face value of $2.2
million were converted to 2,539,995 shares of common stock. Changes in the
liability and equity components since the debentures were issued are shown in
the following table:

5. ACQUISITION, DEFERRED EXPLORATION AND DEVELOPMENT COSTS

The consolidated property expenditures costs for our exploration projects for
the six months ended June 30, 2002 were as follows:

(1) The major portion of the Guiana Shield Transaction ("the Transaction") was
completed on May 21, 2002 with the sale of our interests in the Gross Rosebel,
Headleys and Thunder Mountain properties in Suriname, and our interest in Omai
Gold Mines Limited ("OGML") in Guyana, to Cambior Inc ("Cambior"). The sale of
Cambior's interests in the Yaou, Dorlin and Bois Canon properties in French
Guiana to Golden Star was finalized in June 2002, subject to French regulatory
approval, to conclude the Transaction.

Golden Star received $5 million cash for the sale of the Gross Rosebel property
and will receive three additional deferred payments of $1.0 million each on each
of the first three anniversaries of the May 2002 closing. In addition, Cambior
will pay Golden Star a royalty equal to 10% of the excess of the average
quarterly market price above a gold price hurdle on the first 7 million ounces
of gold production from Gross Rosebel. For soft and transitional rock the gold
price hurdle is $300 per ounce and for hard rock the hurdle is $350 per ounce.

The total consideration for the Headleys and Thunder Mountain properties
comprises a deferred consideration of $1 million, to be paid to Golden Star in
the event that Cambior commences commercial mining from these properties. Due to
the uncertainty of realization of this payment, no asset has been recorded.

Under the terms of the sale of its 30% equity interest and preferred shares in
OGML, Cambior assumed the unpaid portion of the non-interest bearing loan made
to Golden Star in December 1998. In addition, Golden Star received a release and

8

waiver from OGML, Cambior and the Guyana Government in respect of all
liabilities, of any nature, related to the Omai Gold Mine.

Also, in connection with the Transaction, Cambior has transferred to us its 50%
interest in the Yaou and Dorlin properties and is to transfer its 100% interest
in the Bois Canon property, all of which are located in French Guiana.

6. SHARE CAPITAL

Changes in share capital during the six months ended June 30, 2002:

7. OPERATIONS BY GEOGRAPHIC AREA

The following geographic data includes revenues based on product shipment origin
and long-lived assets based on physical location:

9

8. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES

The following Golden Star consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States.

(a) BALANCE SHEETS UNDER US GAAP

10

(b) STATEMENTS OF OPERATIONS UNDER US GAAP

Weighted average common shares outstanding are the same under US GAAP as under
Cdn GAAP for the periods presented.

Under US GAAP the Omai preferred share redemption premium is included with
"Other" before the caption "Net income/(loss) under US GAAP before minority
interest" on the consolidated statements of operations.

(c) STATEMENTS OF CASH FLOWS UNDER US GAAP

(d) FOOTNOTES

(1) Under US GAAP, acquisition costs, exploration costs and general and
administrative costs related to projects are charged to expense as incurred. As
such, the majority of costs charged to Exploration Expense and Abandonment of
Mineral Properties under Cdn GAAP would have been charged to earnings in prior
periods under US GAAP.

(2) Under US GAAP, the preferred share investment in OGML would have a carrying
value of nil since the preferred shares were received in recognition of past
exploration costs incurred by the Company, all of which were expensed for US
GAAP purposes. Therefore, the entire Omai preferred share redemption premium
would have been included in income. Under Cdn GAAP, a portion of the premium on
the Omai preferred share redemption premium is included in income with the
remainder reducing the carrying value of the Company's preferred stock
investment.

11

(3) Cdn GAAP requires that convertible debentures should be classified into
their component parts, as either a liability or equity, in accordance with the
substance of the contractual agreement. Under US GAAP, the convertible debenture
would be classified entirely as a liability.

(4) Accumulated deficit was eliminated effective May 15, 1992. Under US GAAP the
cumulative deficit was greater than the deficit under Cdn GAAP due to the
write-off of certain deferred exploration costs described in (1) above.

(5) Under US GAAP, items such as foreign exchange gains and losses are required
to be shown separately in derivation of Comprehensive Income.

(6) Under US GAAP, the fair value of warrants issued in connection with the
credit facility that was arranged for, but not used to effect the purchase of
BGL, is required to be expensed. Such costs were capitalized as part of the
purchase cost of BGL for Cdn GAAP.

9. COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL REGULATIONS

We are not aware of any events of material non-compliance in our operations with
environmental laws and regulations, which could have a material adverse effect
on our operations or financial condition. The exact nature of environmental
control problems, if any, which we may encounter in the future cannot be
predicted, primarily because of the changing character of environmental
requirements that may be enacted within foreign jurisdictions. The environmental
rehabilitation liability for reclamation and closure costs at the Bogoso mine
was $5.1 million at June 30, 2002 and $5.4 million at December 31, 2001.
Estimates of the final reclamation and closure costs for the new Prestea
property are currently being prepared and once available a provision will be
established.

RESTRICTED CASH LONG-TERM (FOR THE ENVIRONMENTAL REHABILITATION LIABILITY)

Upon the closing of the acquisition of BGL in 1999, we were required, according
to the acquisition agreement, to restrict $6.0 million in cash. These funds are
to be used for the ongoing and final reclamation and closure costs relating to
the Bogoso mine site. The withdrawal of these funds must be agreed to by the
Sellers of BGL, who are ultimately responsible for the reclamation in the event
of non-performance by Golden Star. No cash was drawn down during the first six
months of 2002. At June 30, 2002, the remaining balance in the BGL reclamation
cash fund was $3.3 million.

10. SUBSEQUENT EVENTS

PUBLIC OFFERING

On July 24, 2002 we completed a public offering in the United States and Canada
for the sale of 16.1 million units at Cdn$1.90 per unit, to raise total gross
proceeds of Cdn$30.6 million or net cash to the Company of $18.1 million. The
offering was originally for 14 million units, with the underwriters having a 15%
over-allotment option. The underwriters elected to exercise their maximum
over-allotment of a further 2.1 million units at closing, to increase the total
offering to 16.1 million units.

Each unit consists of one common share and one-half of one common share purchase
warrant. Each whole warrant is exercisable for two years at a price of Cdn$2.28
to purchase an additional common share. The share purchase warrants will be
listed on the Toronto Stock Exchange under the symbol "GSC.WT".

Underwriter fees for the offering equaled 5.5% of the gross proceeds of the
offering. In addition the underwriters received non-transferable warrants to
purchase 770,000 of the Company's common shares at an exercise price of
Cdn$2.28. These warrants will be exercisable during the two-year period
beginning one year from July 24, 2002, the date of closing.

11. INCOME TAXES

No provision has been recorded for income taxes in the current period because
there are sufficient tax losses from prior periods to fully offset the current
period's liability.

12

12. STOCK BASED COMPENSATION

On January 29, 2001 the Company granted 608,000 new common share options with a
Cdn$1.16 exercise price, to eligible employees and directors. The average fair
value of the common share options granted was Cdn$0.83 per option. We do not
recognize any compensation costs related to stock options granted. Had
compensation costs been recognized, based on the fair values at the grant date
for those options vested in the first six months of 2002, our net income and
earnings per share would have been reduced to the amounts shown below:

The fair value of options granted during the first half of 2002 was estimated at
the grant date using the Black-Scholes option-pricing model with the following
weighted average assumptions:

A stock bonus was paid to qualified employees in the first quarter of 2002,
totaling 107,000 shares. Compensation expense at $0.73 per share, the market
price on the date of grant, was recorded for these shares at the grant date.

13. EARNINGS PER COMMON SHARE

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

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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
accompanying consolidated financial statements and related notes. The financial
statements have been prepared in accordance with accounting principles generally
accepted in Canada ("Cdn GAAP"). For a reconciliation to accounting principles
generally accepted in the United States ("US GAAP"), see Note 8 to the attached
consolidated financial statements, as well as "Results of Operations" below.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2001

Net income for the second quarter of 2002 totaled $1.6 million, versus a net
loss of $1.4 million in the second quarter of 2001. Higher gold prices and
increased gold production were the major factors responsible for the improvement
in earnings. Realized gold prices averaged $312 per ounce for the quarter, a 16%
increase from $268 per ounce realized in the second quarter of 2001. Gold
shipments from the Bogoso/Prestea operations totaled 30,419 ounces, up from
24,695 ounces in the same quarter of 2001.

A 5% improvement in mill through-put at Bogoso/Prestea and an increase in gold
recovery, 73% versus 56% in the same period of 2001, were responsible for the
production increases. A change in ore types, from Bogoso transition ore in the
second quarter of 2001 to Prestea oxide ore in the second quarter of 2002 was
responsible for both the lower unit costs and improved recoveries. Mill feed
grade averaged 2.27 g/t during the quarter, up from 2.22 g/t in the second
quarter of 2001. Second quarter cash costs averaged $173 per ounce compared to
$280 per ounce for the same quarter last year, while total cash costs, including
royalties, averaged $195 per ounce for the second quarter, down from $288 per
ounce in the second quarter in 2001.

Lower depreciation in the current quarter versus a year ago reflects the new
reserve base for the Prestea surface concession, which allows amortization of
costs over a larger number of ounces. Additionally, many of the assets
associated with the initial purchase of the Bogoso operation in 1999, including
the cost of the Bogoso mill, were fully amortized over the two-year life of the
Bogoso oxide mining operation, which ended in late 2001.

Increases in G&A for the quarter are related to Guyanor where a lack of active
exploration projects required that certain costs be expensed as part of G&A that
would normally be capitalized as project costs. Severance costs at Guyanor also
contributed to the G&A increase.

SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2001

Net income for the first six months of 2002 totaled $3.0 million, versus a net
loss of $3.3 million in the first six months of 2001 of 2001. As with the second
quarter of 2002, higher gold prices and increases in gold production were the
major factors responsible for the improvement in earnings for the first six
months. Realized gold prices averaged $301 per ounce for the first six months, a
14% increase from $265 per ounce realized in the first six months of 2001. Gold
shipments from the Bogoso/Prestea operations totaled 62,064 ounces, up from
42,506 ounces in the first six months of 2001.

A 6% improvement in mill through-put at Bogoso/Prestea and an increase in gold
recovery, 72% versus 50% in the same period of 2001, were responsible for the
production increases. A change in ore types, from Bogoso transition ore in the
first six months of 2001 to Prestea oxide ore in the same period of 2002 was
responsible for both the lower unit costs and improved recoveries. Mill feed
grade averaged 2.44 g/t during the six months, down from 2.62 g/t in the same
period of 2001, but improvements in recovery more than off set the lower grade.
Cash costs for the first six months averaged $174 per ounce compared to $274 per
ounce for the same period last year, while total cash costs, including
royalties, averaged $195 per ounce for the six months, down from $282 per ounce
in the first six months of 2001.

Lower depreciation in the first six months versus a year ago reflects the new
reserve base for the Prestea surface concession, which allows amortization of
costs over a larger number of ounces. Additionally, many of the assets
associated with the initial purchase of the Bogoso operation in 1999, including
the cost of the Bogoso mill, were fully amortized over the two-year life of the
Bogoso oxide mining operation, which ended in late 2001.

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Increases in G&A for the six months are related to Guyanor where a lack of
active exploration projects required that certain costs be expensed as part of
G&A that would normally be capitalized as project costs. Severance costs at
Guyanor also contributed to the G&A increase.

GUYANOR

Guyanor properties remained on a care and maintenance basis during the first six
months of 2002. As such there was no deferred exploration activity. Additional
staff reductions were effected in the six months bringing total Guyanor staff to
eleven employees. We are continuing to seek joint venture partners to activate
exploration work on various Guyanor properties. We are also investigating the
possibility of asset sales in French Guiana.

SIGNIFICANT EVENTS DURING THE FIRST SIX MONTHS OF 2002

GUIANA SHIELD TRANSACTION - The major portion of the Guiana Shield Transaction
("the Transaction") was completed on May 21, 2002 with the sale of our interests
in the Gross Rosebel, Headleys and Thunder Mountain properties in Suriname, and
our interest in Omai Gold Mines Limited ("OGML") in Guyana, to Cambior Inc
("Cambior"). The sale of Cambior's interests in the Yaou, Dorlin and Bois Canon
properties in French Guiana to Golden Star was finalized in June 2002 to
conclude the Transaction.

Golden Star received $5 million cash for the Gross Rosebel property and will
receive three additional deferred payments of $1.0 million each on each of the
first three anniversaries of the May 2002 closing. In addition, Cambior will pay
Golden Star a royalty equal to 10% of the excess of the average quarterly market
price above a gold price hurdle on the first 7 million ounces of gold production
from Gross Rosebel. For soft and transitional rock the gold price hurdle is $300
per ounce and for hard rock the hurdle is $350 per ounce.

The total consideration for the Headleys and Thunder Mountain properties
comprises a deferred consideration of $1 million, to be paid to Golden Star in
the event that Cambior commences commercial mining from these properties. Due to
the uncertainty of realization of this payment, no asset has been recorded.

Under the terms of the sale of our 30% equity interest and preferred shares in
OGML, Cambior assumed the unpaid portion of the non-interest bearing loan made
to Golden Star in December 1998. In addition, Golden Star received a release and
waiver from OGML, Cambior and the Guyana Government in respect of all
liabilities, of any nature, related to the Omai Gold Mine.

Also, in connection with the Transaction, Cambior has transferred to us its 50%
interest in the Yaou and Dorlin properties and its 100% interest in the Bois
Canon property, all of which are located in French Guiana.

PRIVATE PLACEMENT - A private placement was completed in January of 2002, which
resulted in the sale of 11,516,000 units, each unit consisting of one common
share and one half warrant, for net proceeds of $5.1 million. Under the terms of
the placement agreement, $2.6 million of the cash was temporarily restricted in
an escrow account pending the occurrence of certain events. In late April 2002,
following the Registration Statement on Form S-3 being declared effective, the
escrowed funds were transferred to Golden Star.

FINAL PAYMENT TO THE SELLERS OF BOGOSO GOLD LIMITED ("BGL") - A $2.9 million
gold-price related payment was made to the Sellers of BGL in January 2002. This
liability was established under the terms of the original September 1999 BGL
purchase agreement and the amount of the payment was determined by a formula
which was based on the average price of gold over the two-year period following
our purchase of the interest in September 1999.

FINAL INSTALLMENT ON THE PRESTEA PURCHASE AGREEMENT - In January 2002 our 90%
owned subsidiary, BGL obtained a $0.8 million loan from a bank in Ghana and used
the proceeds to make a payment to Prestea Gold Resources Limited ("PGR") for the
purchase of an option related to the Prestea property. During 2001, BGL had also
paid $1.3 million in cash to PGR for the purchase option related to the Prestea
property. During 2001, BGL had also paid $1.3 million in cash to PGR for the
purchase of an option related to the Prestea property.

ACQUISITION OF AN INTEREST IN THE PRESTEA UNDERGROUND MINE - In March 2002 BGL
entered into a new agreement with PGR, the Ghana Mineworkers Union and the Ghana
Government, among others, relating to the Prestea underground mine. The salient
features of the new agreement are as follows:

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(i) the Prestea underground mine was shut down and put on care and
maintenance;

(ii) the mining lease over the Prestea underground mine was transferred from
PGR to BGL, to be held by BGL on behalf of a joint venture between BGL,
PGR and Government. BGL has an initial 45% interest in the JV;

(iii) BGL has taken over the management of the Prestea underground mine;

(iv) BGL has commenced an assessment of the safety and economic viability of
the underground mine, which could take as much as two years to
complete; and

(v) certain infrastructure associated with the underground mine is being
decommissioned and demolished by BGL to make way for the development of
BGL's surface mining operations at Prestea.

Pursuant to the new agreement, BGL has, on behalf of PGR, paid $1.9 million of
employee back pay and severance costs to PGR's former employees, each of whom
has entered into individual separation agreements with PGR. Upon the demolition
of the Prestea underground mine infrastructure referred to above, BGL will make
a final payment of $0.5 million to PGR.

The Prestea underground mine is contained within a mining lease, which covers
the same area as the surface mining lease granted to BGL on June 29, 2001. The
surface mining lease is restricted down to a depth of 150 metres below sea level
and the underground mining lease is restricted to material deeper than 150
metres below sea level. The underground mine, which has operated for some 100
years, producing in excess of 9 million ounces of gold, therefore lies
underneath some of the surface reserves to be mined by BGL. The consolidation of
the underground mine with the activities of BGL is therefore a natural
progression to the orderly and economic development of the area.

LISTING ON THE AMERICAN STOCK EXCHANGE - During the second quarter Golden Star's
common stock was listed on the American Stock Exchange and trading began on
Wednesday June 19, 2002 under the symbol "GSS". Trading on the Over The Counter
Bulletin Board under the symbol "GSRSF" was discontinued at close of business on
Tuesday June 18, 2002. Our common stock was also listed on the Berlin exchange
in June 2002 under the symbol "GS5". Golden Star continues to trade on the
Toronto Stock Exchange under the symbol "GSC".

BOGOSO/PRESTEA RESERVE ADDITION - On June 20, 2002 we announced an increase in
Proven and Probable Mineral Reserves ("Mineral Reserves") at Bogoso/Prestea. As
at May 31, 2002 Mineral Reserves at Bogoso/Prestea were comprised of 20,637,000
tonnes at an average grade of 3.15 g/t for total contained gold of 2,091,000
ounces. This represents an increase of 263,467 ounces compared to the stated
Mineral Reserves as at December 31, 2001. In addition, the proportion of Mineral
Reserves in the proven category has increased from 56% to 69%, as a result of
additional drilling.

This increase in the Mineral Reserves is a result of additional work and
drilling programs at Bogoso/Prestea in Ghana on the deposits known as Buesichem,
Brumase/Beposo and Plant-North. We had not previously published any reserves for
Brumase/Beposo and the new Mineral Reserves for this deposit are the result of
exploration on the Prestea property since September 2001. The Company had
previously published reserves for its Plant-North and Buesichem deposits and the
increase in Mineral Reserves for these deposits is a result of greater
confidence resulting from infill drilling. At Plant-North, this work resulted in
the delineation of wider zones at the southern end of the deposit. The
Plant-North deposit remains open to the south and further exploration will be
carried out during the current year.

LIQUIDITY AND CAPITAL RESOURCES

SIX MONTHS ENDED JUNE 30, 2002

Profitable operations at Bogoso/Prestea during the first six months of 2002 and
the private placement in January of this year have contributed to a significant
improvement in our liquidity. We held $6.6 million of cash at June 30, 2002, up
from $0.5 million at December 31, 2001. In addition, an equity offering in July
2002 yielded approximately $18.1 million of cash (see Subsequent Events
discussion below).

Cash flow from operations totaled $1.9 million during the first six months of
2002, up from $1.5 million in the same period of 2001. In addition to generating
$1.9 million of operating cash flow, we reduced outstanding vendor payables by
$2.1 million in the first six months of 2002 bringing all payables current.
Investing activities consumed a net $0.4 million of cash in the six months. The
sale of the Gross Rosebel property in Suriname contributed $5.0 million of cash
during the six months which

16

was used to fund $5.2 million of new mine property expenditures. Mine property
expenditures included $2.2 million for the acquisition of a 45% managing
interest in the Prestea underground mine, $0.6 million for work on the Wassa
property and $2.8 million of development costs on the Prestea property.

Issuance of new common shares during the first six months of 2002 contributed
$7.3 million of cash. A private placement in January 2002 provided a net $5.1
million of cash. Exercises of stock options yielded an additional $0.5 million
during the six months and warrant exercised contributed an additional $1.7
million of cash. Liquidation of several liabilities, including the amount due
the Sellers of BGL, consumed $3.5 million. A new bank loan in Ghana provided
$0.8 million which was used to cover a portion of the new PGR underground mine
acquisition costs.

At June 30, 2002, working capital stood at $8.2 million, versus a working
capital deficit of $4.6 million at the end of 2001.

OUTLOOK

The three main objectives for 2002 continue to be: (i) orderly and efficient
development of the Prestea surface lease reserves allowing an adequate flow of
oxide and other non-refractory ores to the Bogoso mill; (ii) successful
acquisition of the Wassa property; and (iii) commencement of the development of
the Wassa property.

We have agreed to terms with Satellite Goldfields Limited ("Satellite") and its
senior secured creditors, to acquire the Wassa property. The broad terms of the
agreement are summarized as follows. We have agreed to pay $4.0 million at
closing and an additional $5.0 million on a deferred basis upon the
recommencement of gold production at the Wassa property. The initial $4.0
million and the deferred $5.0 million described above will be funded by a debt
facility to be provided by Satellite's existing senior secured creditors. We
will repay this debt facility over a four-year period beginning one year after
the closing, during which we would carry out exploration and feasibility studies
of the possible redevelopment of the property.

As additional consideration we have agreed to pay a royalty on future gold
production from Wassa. The royalty will be determined by multiplying gold
production from Wassa for each quarter by a royalty rate of a minimum of $7.00
per ounce. The royalty rate will increase by $1.00 for each $10.00 increase in
the average market price for gold for each quarter above $280 per ounce up to a
maximum of $15.00. We expect to complete the acquisition of the Wassa property
once the regulatory approvals in Ghana are obtained and the definitive
documentation to be delivered at closing is finalized. We expect the transaction
to close in the third quarter of 2002.

At Bogoso/Prestea we have budgeted consolidated revenue of approximately $37
million in 2002 and total operating and general and administrative expenditures
of approximately $32 million. Consolidated net exploration and development
expenditures, after recoveries from joint venture partners, are budgeted at
approximately $1.4 million, most of which will be spent in Ghana. We have
budgeted production from Bogoso/Prestea at 134,000 ounces at an average cash
cost of $175 per ounce during 2002. Meanwhile our activities in the Guiana
Shield will be primarily care and maintenance, although we will continue to seek
joint venture funded opportunities in Suriname and Guyana. There is minimal
budgeted exploration spending by Guyanor in 2002, although we are actively
seeking joint venture partners that could fund additional work at Paul Isnard or
at our other properties. As more fully disclosed under Risk Factors in the
Company's 2001 Form 10-K, numerous factors could cause our budget estimates to
be wrong or could lead our management to make changes in our plans and budgets.

Based on the Company's operating forecasts, and assuming the same realized gold
price, the first six month's results are representative of estimated full-year
earnings for 2002 of $0.10 per share. The results for the second quarter were
better than expected in our earlier forecast as a result of higher gold prices,
higher production and lower production costs. While the forecast for the third
quarter shows less production and slightly higher costs than in our previous
forecast, results in the fourth quarter, following commencement of mining at
Prestea's Plant North deposit, are expected to make up for any shortfall. The
Company's production projections for the remainder of 2002 are as follows:

In addition, we plan to continue evaluation acquisition and growth opportunities
in Ghana and elsewhere in West Africa. We will also strive to maximize the value
of our South American assets via asset sales and joint venture financed
exploration activities where possible.

SUBSEQUENT EVENTS

PUBLIC OFFERING

On July 24, 2002 we completed a public offering in the United States and Canada
with the sale of 16.1 million units at Cdn$1.90 per unit, to raise total gross
proceeds of Cdn$30.6 million. The offering was originally for 14

17

million units, with the underwriters having a 15% over-allotment option. The
underwriters elected to exercise their maximum over-allotment of a further 2.1
million units at closing, to increase the total offering to 16.1 million units.

Each unit consists of one common share and one-half of one common share purchase
warrant. Each whole warrant is exercisable for two years at a price of Cdn$2.28
to purchase an additional common share. The share purchase warrants are
listed on the Toronto Stock Exchange under the symbol "GSC.WT".

Underwriter fees for the offering equaled 5.5% of the gross proceeds of the
offering. In addition the underwriters received non-transferable warrants to
purchase 770,000 of the Company's common shares at an exercise price of
Cdn$2.28. These warrants will be exercisable during the two-year period
beginning one year from July 24, 2002, the date of closing.

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

INTEREST RATE RISK

We may invest our cash in debt instruments of the United States Government and
its agencies, and in high-quality corporate issuers. Investments in both fixed
rate and floating rate interest-earning instruments carry a degree of interest
rate risk. Fixed rate securities may have their fair market value adversely
impacted due to a rise in interest rates, while floating rate securities may
produce less income than expected if interest rates fall. Due in part to these
factors our future investment income may fall short of expectations due to
changes in interest rates or we may suffer losses in principal if forced to sell
securities which have declined in market value due to changes in interest rates.
Given the level of excess cash currently available for investing, the impact on
revenues from changes in interest rates would not be material. We may in the
future actively manage our exposure to interest rate risk.

FOREIGN CURRENCY EXCHANGE RATE RISK

The price of gold is denominated in United States dollars and the majority of
our revenues and expenses are denominated in United States dollars. As a result
of the limited exposure, we believe that we are not exposed to a material risk
as a result of any changes in foreign currency exchange rates. As such we do not
currently utilize market risk sensitive instruments to manage our exposure.

COMMODITY PRICE RISK

We are engaged in gold mining and related activities, including exploration,
extraction, processing and reclamation. Gold bullion is our primary product and,
as a result, changes in the price of gold could significantly affect results of
operations and cash flows. According to current estimates, a $25 change in the
price of gold could result in an annual $2.9 million effect on the results of
operations and cash flows. We currently do not have a program for hedging, or to
otherwise manage exposure to commodity price risk. We may in the future manage
our exposure through hedging programs.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are currently no material pending legal proceedings to which the Company
or any of its subsidiaries is a party or to which any of its properties or those
of any of its subsidiaries is subject. The Company and its subsidiaries are,
however, engaged in routine litigation incidental to our business. No material
legal proceedings involving the company are pending, or, to the knowledge of the
Company, contemplated, by any governmental authority. The Company is not aware
of any material events of noncompliance with environmental laws and regulations.
The exact nature of environmental control problems, if any, which the Company
may encounter in the future, cannot be predicted, primarily because of the
changing character of environmental regulations that may be enacted with foreign
jurisdictions.

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

At the Annual General and Special Meeting of the Shareholders of the Company
held on May 28, 2002, shareholders were asked to (i) elect six directors,
Messrs. James Askew, Peter Bradford, David Fagin, Ian MacGregor, Ernest Mercier
and Robert Stone; (ii) approve the re-appointment of auditor; (iii) approve for
issuance by the Company, in one or more private placements during the twelve
(12) months following approval of the resolution, of up to 30,000,000 Common
Shares; (iv) approve amendments to the Company's by-laws to comply with recent
changes in the Canada Business Corporations Act (v) approve an amendment to the
Company's Articles of Arrangement to provide for meetings of the Company to be
held at specific locations outside of Canada; and (vi) approve an amendment to
the Company's stock option plan.

(i) Votes cast in the election of directors were as follows:

(ii) Votes cast for the appointment of PricewaterhouseCoopers LLP, Chartered
Accountants as auditor of the Company until the next annual general meeting of
shareholders at a remuneration to be fixed by the directors:

(iii) Votes cast to approve issuance by the Company, in one or more private
placements during the twelve (12) months following approval of the resolution,
of up to 30,000,000 Common Shares:

(iv) Votes cast to approve amendments to the Company's by-laws to comply with
recent changes in the Canada Business Corporations Act:

(v) Votes cast for approval of an amendment to the Company's Articles of
Arrangement to provide for meetings of the Company to be held at specific
locations outside of Canada:

(vi) Votes cast for approval of an amendment to the Company's stock option plan:

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ITEM 6. EXHIBITS, REPORTS ON FORM 8-K

(a) Exhibits

4.1 Warrant Indenture, dated July 17, 2002, among the Company and CIBC Mellon
Trust, as Trustee, including the Form of Warrant

10.1 Underwriting Agreement, dated July 17, 2002, between Canaccord Capital
Corporation and BMO Nesbitt Burns Inc., as the Underwriters, and the Company

10.2 Agency Agreement, dated July 17, 2002, between Canaccord Capital
Corporation (USA) Inc. and BMO Nesbitt Burns Corp. and the Company

Exhibit 99.1 Officer certificate for Peter L. Bradford

Exhibit 99.2 Officer certificate for Allan J. Marten

(b) Reports on Form 8-K during the quarter ended June 30, 2002

On June 26, 2002 the Company filed an 8-K/A with the Securities and Exchange
Commission, announcing the completion of a transaction which transferred
ownership of the Gross Rosebel gold property and other of the Company's
properties in the Guiana Shield area of South America to Cambior Inc. for $8.0
million plus future production royalties.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

GOLDEN STAR RESOURCES LTD.

By: /s/ Peter J. Bradford
------------------------------------------
Peter J. Bradford
President and CEO

By: /s/ Allan J. Marter
------------------------------------------
Allan J. Marter
Senior Vice-President and
Chief Financial Officer

August 5, 2002

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EXHIBIT INDEX