Golden Star Reports Second Quarter 2007 Results

    DENVER, August 7 /CNW/ - Golden Star Resources Ltd. (AMEX:   GSS)(TSX: GSC)
today announced a net loss of $2.3 million, or $0.010 per share, for the
second quarter of 2007. (All currency in this news release is expressed in
U.S. dollars, unless otherwise noted.) These results will be discussed in our
quarterly results conference call on August 8, 2007 at 11:00 a.m. Eastern
time, and a webcast presentation will be available at


    --  Revenues from gold sales were $28.1 million on a volume of 42,295
ounces from Bogoso/Prestea and Wassa, at a realized gold price of $665 per

    --  Wassa had gold sales of 28,385 ounces at a cash operating cost of
$471 per ounce, surpassing guidance of 27,000 ounces of gold.

    --  We declared commercial production of the Bogoso Sulfide Processing
Plant from July 1, 2007. Revenues and operating expenses will be recorded in
our consolidated statement of operations, starting with the third quarter of

    --  Bogoso/Prestea's gold sales were 13,910 ounces with cash operating
costs of $778 per ounce. In addition, the Bogoso Sulfide Processing Plant
produced 6,016 ounces of gold, of which the operating costs net of revenue
were capitalized.

    --  The feasibility study and the development of the Hwini-Butre and
Benso projects as a satellite source of high grade ore for Wassa was approved
by our Board of Directors in May, and is expected to commence in the third
quarter of 2007, once permitting is completed. Mining from these deposits is
expected to significantly improve the gold production, average cash operating
costs and mine life at Wassa from the third quarter of 2008.

    --  We expect the mining industry power station to be commissioned and
made operational in August 2007. Separately, the Company is negotiating a
power purchase agreement with a provider that will construct a 20 megawatt
power station at Bogoso/Prestea based on a 10 megawatt take or pay commitment
by Golden Star.


    The second quarter of 2007 recorded a net loss of $2.3 million or $0.010
per share as compared to a net income of $13.1 million or $0.063 per share for
the second quarter of 2006. The major factor contributing to the earnings for
the second quarter of 2006 was the sale of EURO Ressources S.A. which provided
a $20.9 million gain.

                       For the three months ended For the six months ended

    SUMMARY OF                  June 30,                  June 30,
     FINANCIAL RESULTS ---------------------------------------------------
                                         2006                     2006
                            2007      (restated)      2007     (restated)
    Gold sold (oz)            42,295       45,207      88,119       90,147
    Price realized ($
     per ounce)                  665          634         658          594
    Cash operating cost
     ($ per ounce)               572          492         552          494
    Royalties ($ per
     ounce)                       20           18          20           17
    Total cash cost ($
     per ounce)                  592          510         572          511
    Total revenues (in
     thousands $)             28,118       28,675      57,979       53,611
    Net income/(loss)
     (in thousands $)         (2,289)      13,084      (5,854)      32,407
    Net income/(loss)
     per share - basic
     ($)                      (0.010)       0.063      (0.026)       0.156
    Weighted average
     shares outstanding
     (in millions)             233.2        207.1       224.7        207.2

    (1) See note on non-GAAP financial measures below.


    At June 30, 2007 our cash, cash equivalents and short term investments
totaled $38.5 million, up from $27.1 million at the end of December 2006.
During the second quarter of 2007, cash flow from operations provided $4.3
million compared with $1.5 million consumed by operations during the second
quarter of 2006. Operating activities consumed $4.0 million during the first
half of 2007 compared with $7.2 million consumed for the same period of 2006.
Increases in inventories related to increases in ore stockpiles and parts and
supplies inventories for the Bogoso Sulfide Processing Plant were the major
contributing factors to cash used by operations during the first half of 2007.

    During the first half of 2007, Golden Star invested $46.2 million into
the Bogoso Sulfide Expansion Project including $35.3 million of construction
costs, $6.4 million for pre-production waste stripping, $1.3 million for
mining equipment and $3.2 million of capitalized interest.

    Liquidity Outlook

    While cash flow from operations was negative at Bogoso/Prestea during the
first six months of 2007, we expect that, following the commencement of
commercial production of the Bogoso Sulfide Processing Plant from July 1,
2007, the better oxide ore grades and increased ore availability from the
Pampe pit will result in positive cash flows from both Bogoso processing
plants in the second half of 2007. We also expect that Wassa will continue to
generate cash from operations in the second half of 2007. These operational
cash flows, along with the $38.5 million of cash and cash equivalents at June
30, 2007, and debt facilities currently in place, will be sufficient to
complete work at the Bogoso Sulfide Processing Plant, fund our portion of the
new power plant in Ghana, fund the 2007 development activities at the HBB
properties and cover other capital needs planned for 2007.


                       For the three months ended For the six months ended

    Bogoso/Prestea              June 30,                  June 30,
     Operations        -------------------------- ------------------------
                           2007          2006         2007        2006
    Ore mined
     tonnes)                     241          343          467         724
    Waste mined
     tonnes)                   2,580        2,106        3,925       4,448
    Tonnes milled
     (thousands)                 285          370          848         706
    Average grade
     (grams/tonne)              2.40         3.57         1.93        3.51
    Mill recovery (%)           77.3         55.3         69.9        57.3
    Gold sold (oz)        13,910 (2)       23,393   31,631 (3)      44,128
    Cash operating
     cost ($/oz) (1)             778          498          699         501
    Royalties ($/oz)              20           19           19          18
    Total cash cost
     ($/oz) (1)                  798          517          718         519

    (1) See note on non-GAAP financial measures below.

    (2) Excludes 6,016 ounces produced from the sulfide plant during

    (3) Excludes 7,803 ounces produced from the sulfide plant during

    Bogoso/Prestea incurred a $3.9 million operating margin loss during the
second quarter of the year from sales of 13,910 ounces of gold, versus a
negligible operating margin on gold sales of 23,393 ounces for the second
quarter of 2006. The major contributing factor to the operating margin loss
was lower gold shipments which were not offset by lower depreciation and
higher gold prices.

    For the first six months of 2007, Bogoso/Prestea incurred a $6.2 million
operating margin loss on sales of 33,631 ounces of gold compared to an
operating margin loss of $1.9 million based on sales of 44,128 ounces for the
first six months of 2006.


                       For the three months ended For the six months ended

    Wassa Operations            June 30,                  June 30,
                       -------------------------- ------------------------
                           2007          2006        2007         2006
    Ore mined
     tonnes)                     757          608       1,422        1,276
    Waste mined
     tonnes)                   2,595        3,179       4,306        6,628
    Tonnes milled
     (thousands)                 880          958       1,887        1,935
    Average grade
     (grams/tonne)              1.13         0.84        1.03         0.83
    Mill recovery (%)           89.7         88.6        90.5         88.1
    Gold sold (oz)            28,385       21,814      56,489       46,019
    Cash operating
     cost ($/oz) (1)             471          487         470          486
    Royalties ($/oz)              20           17          20           18
    Total cash cost
     ($/oz) (1)                  491          504         490          504

    (1) See note on non-GAAP financial measures below.

    Wassa generated a $1.4 million operating margin in the second quarter of
2007 based on sales of 28,385 ounces of gold compared to an operating margin
of $0.3 million in the second quarter of 2006 on sales of 21,814 ounces of
gold. The improvement in operating margin and in ounces sold was primarily
attributable to better ore grades.

    For the six months ended June 30, 2007, Wassa generated $0.2 million of
operating margin based on sales of 56,489 ounces of gold versus an operating
margin loss of $1.8 million on sales of 46,019 ounces of gold for the first
half of 2006. The improvement in the first six months of 2007 versus the first
six months of 2006 is due to increased gold ore grade and recovery rates.


    In 2005, recognizing that approximately 80% of the remaining ore reserves
at Bogoso/Prestea are refractory, the decision was made to construct a 3.5
million tonne per annum sulfide processing plant which utilizes the
proprietary BIOX(R) technology. The existing 1.5 million tonne per annum oxide
processing plant continues to process Bogoso/Prestea oxide ores.

    Construction and commissioning of the sulfide processing plant were
completed in June 2007 with commercial production beginning on July 1, 2007.
For the second half of this year, Golden Star will be reporting revenues and
operating expenses from this plant in our consolidated statements of
operations. The plant is expected to attain design throughput and recovery by
the end of 2007. Combined, the new sulfide processing plant and the oxide
processing plant are expected to process 5.0 million tonnes of ore per year
when operating at design capacity.


    Power supply in Ghana remains unchanged and we continue to be limited to
75 percent of our normal power requirements as a result of the low water
levels at the Akosombo reservoir, although there are indications in the last
week that the water level in the Akosombo has started to rise.

    The construction of the nominal 100 megawatt power station by the
consortium of Golden Star, Newmont Mining Corporation, Gold Fields Limited and
Anglogold Ashanti Limited is nearing completion and commissioning has
commenced. We expect the power station to be commissioned and made operational
in August 2007. This power station is expected to generate approximately 80
megawatts of power on a continuous basis of which 25% will belong to Golden

    Separately, Golden Star is currently negotiating a two year, 10 megawatt,
take or pay power purchase agreement with a provider that will develop a 20
megawatt power station at Bogoso/Prestea. It is expected that this power
station, which can be fueled with either fuel oil or heavy fuel oil, could be
operational by early 2008.


    The feasibility study and development of HBB was approved by our Board of
Directors in May 2007. Subsequently, the permitting of the project has been
progressed and a draft Environmental Impact Statement submitted to the Ghana
Environmental Protection Agency. Development is expected to commence in the
third quarter of 2007 once permitting is completed while, in the meantime, the
selection of construction and haulage contractors is being finalized.

    It is anticipated that construction of a 52 kilometer haul road will
commence late in the third quarter with completion estimated by mid-2008 and
the selection of construction and haulage contractors is currently being
finalized. In the second quarter of 2008, it is anticipated that pre-stripping
and ore mining at Benso would commence with the first ore hauled to Wassa for
processing in the third quarter of 2008. Mining at Hwini-Butre is expected to
commence mid-2009 once a 30 kilometer haul road extension is completed. The
estimated capital expenditures for the development of the HBB properties,
including haul road construction, is approximately $50 million.


    Exploration is continuing in Suriname on the Saramacca project, our joint
venture with Newmont Mining Corporation. Activities are focused on the
completion of the first phase of induced polarization surveys and auger
geochemistry programs with particular emphasis on the Anomaly M zone and
environs. Early induced polarization results are helping us to define and
delineate which anomalous areas present the most attractive targets for future
drilling. The joint venture committee will review and rank the targets
identified prior to the commencement of drilling in the third quarter of 2007.
This preliminary work will also add significantly to our geologic knowledge
base for the area.

    Drilling activities continued at Prestea, with a focus on the Footwall
Reef. Additional drilling is slated for later in 2007, with the intent of
determining the feasibility of decline development from the Plant-North pit.

    During the second quarter, exploration in Ghana focused on the HBB
Properties, particularly the Manso, Amantin and Chichiwelli properties. The 20
kilometer long soil anomaly at the Manso concession has been further tested
with 400 meter spaced deep auger soil sampling. Results received to date
confirm a favorable in soil gold anomaly coincident with both geophysical
anomalies and the interpreted geological structures. This anomaly is now ready
for RAB drill testing which we expect to commence in the third quarter.

    Approximately 2,000 meters of diamond drilling was completed at Yirisen
in Sierra Leone. A thorough evaluation of results will be conducted in the
near future as preliminary results were not as encouraging as hoped. At
Pampana, trenching and soil sampling programs will continue to test the
remaining geological targets while at Sonfon, a 10,000 meter RAB drill program
and ground geophysical survey will commence.

    Field exploration programs on the Goulagou and Rounga concessions in
Burkina Faso commenced this quarter with infill soil geochemistry undertaken
to follow up on earlier anomalies defined by the previous concession holders.
Results from several programs were received and plans are being made to follow
up on the results with both RAB drilling and ground geophysical surveys.

    While our two Niger properties had previous systematic exploration
programs conducted on them over the last 10 years, the geologic data has never
been adequately compiled. During the second quarter, we reviewed and organized
most of this data and have now initiated follow-up work programs on various
areas. The follow-up programs involve infill soil geochemistry in areas not
covered by previous geochemical surveys and more detailed grids over more
prospective areas.


    Our main objectives for the remainder of 2007 are to:

    --  Achieve design throughput and design recovery at the Bogoso Sulfide
Processing Plant during the third and fourth quarters of 2007, respectively;

    --  Permit and commence oxide mining from the Prestea South ore bodies to
provide an additional source of oxide ore to the Bogoso Oxide Processing

    --  Permit and commence development of the HBB properties;

    --  Progress construction and commissioning of power projects; and

    --  Optimize mining and processing activities and costs at Bogoso/Prestea
and Wassa.

    Golden Star is un-hedged and fully exposed to any movement in gold prices
as we believe that gold prices will continue to remain strong.

    We anticipate better ore grades and better ore availability for the
Bogoso Oxide Processing Plant in the second half of 2007 and higher operating
rates and gold recovery from the Bogoso Sulfide Processing Plant, which are
expected to result in higher gold output in the second half of 2007 and
positive cash flows. Based on these anticipated improvements, we are revising
our estimated 2007 gold production at Bogoso/Prestea to approximately 160,000
to 175,000 ounces of gold at an average cash operating cost of $420 to $480
per ounce. Our guidance for Wassa is gold production of approximately 110,000
to 125,000 ounces at an average cash operating cost of $430 to $480 per ounce.

    As more fully disclosed in the Risk Factors Item 1A in our December 31,
2006 form 10-K as amended, numerous factors could cause our estimates and
expectations to be wrong or could lead to changes in our plans. Under any of
these circumstances, the estimates described above could change materially.


    The following information is summarized and excerpted from the Company's
unaudited consolidated financial statements and notes thereto from our Form
10-Q, which we intend to file with the SEC today.

                                                     As of       As of
    Condensed Consolidated Balance Sheets          June 30,   December 31,
    (in thousands)                                   2007         2006
    Cash and short term investments                   $16,129      $27,108
    Other current assets                              101,486       63,426
    Property, plant and equipment                      95,582       93,059
    Deferred exploration                               27,198      167,983
    Mining properties                                 280,806      136,775
    Mine construction-in-progress                     211,277      165,155
    Other assets                                       18,633       10,268
    Total assets                                     $751,111     $663,774

    Current liabilities                               $64,552      $62,276
    Long term debt                                     73,570       73,786
    Asset retirement obligations                       16,774       16,034
    Deferred income tax payable                        42,113       42,154
    Minority interest                                   7,201        7,424
    Shareholders' equity                              546,901      462,100
    Total liabilities and shareholders' equity       $751,111     $663,774

    Condensed Consolidated Statements of          For the six months ended
     Operations                                           June 30,
    (in thousands, except per share amounts)      ------------------------
                                                      2007        2006
    Gold sales                                        $57,979     $53,611
    Mining operations expense                          50,394      46,092
    Depreciation, depletion and amortization           12,997      10,825
    General and administrative expenses                 7,372       5,132
    Derivative mark-to-market losses                      466      10,728
    Gain on sale of investment                         (3,543)    (51,234)
    Foreign exchange (gain)/loss                         (219)     (3,457)
    Other expenses                                      1,754      (3,396)
    Net income/(loss) before minority interest        (11,242)     38,921
    Minority interest                                     222          72
    Net income/(loss) before tax                      (11,020)     38,993
    Income tax benefit                                  5,166      (6,586)
    Net income/(loss)                                 $(5,854)    $32,407
    Earnings/(loss) per share - basic                 $(0.026)     $0.156
    Earnings/(loss) per share - diluted               $(0.026)     $0.155


    Golden Star holds a 90% equity interest in the Bogoso/Prestea and Wassa
open-pit gold mines in Ghana. In addition, Golden Star has an 81% interest in
the currently inactive Prestea Underground mine and various other property
interests in Ghana, as well as gold exploration interests elsewhere in West
Africa and in the Guiana Shield of South America. Golden Star has
approximately 233 million common shares outstanding.

    Statements Regarding Forward-Looking Information: Some statements
contained in this news release are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Investors are
cautioned that forward-looking statements are inherently uncertain and involve
risks and uncertainties that could cause actual results to differ materially.
Such statements include comments regarding the achievement of anticipated
through-put and metallurgical recoveries at the Bogoso Sulfide Expansion
Project, estimated 2007 gold production and cash operating costs at
Bogoso/Prestea and Wassa, anticipated commencement dates of development,
mining, and production and development costs with respect to the HBB
Properties, effects of processing ore from the HBB properties on Wassa gold
production, cash operating costs and mine life, expected improvements in cash
flows at Bogoso/Prestea in the second half of 2007, completion of construction
of the new power station in Ghana and expected power output, the recovery of
any mineral reserves, planned operations, production commencement dates,
grade, processing capacity, recoveries, potential mine life, the volatility of
gold prices, development, costs, expenditures, and exploration. Factors that
could cause actual results to differ materially include unexpected events
during start-up of the Bogoso Sulfide Expansion Project; availability,
adequacy and cost of power, variations in ore grade, tonnes mined, crushed or
milled; variations in relative amounts of refractory, non-refractory and
transition ores; delay or failure to receive board or government approvals;
timing and availability of external financing on acceptable terms; technical,
permitting, mining or processing issues, and fluctuations in gold price and
costs. There can be no assurance that future developments affecting the
Company will be those anticipated by management. Please refer to the
discussion of these and other factors in our Form 10-K for 2006 as amended.
The forecasts contained in this press release constitute management's current
estimates, as of the date of this press release, with respect to the matters
covered thereby. We expect that these estimates will change as new information
is received and that actual results will vary from these estimates, possibly
by material amounts. While we may elect to update these estimates at any time,
we do not undertake to update any estimate at any particular time or in
response to any particular event. Investors and others should not assume that
any forecasts in this press release represent management's estimate as of any
date other than the date of this press release.

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

For further information:

For further information: Golden Star Resources Ltd. Tom Mair,
+1-800-553-8436 Chief Financial Officer or Bruce Higson-Smith, +1-800-553-8436
Vice President Corporate Development or Anne Hite, +1-800-553-8436 Investor
Relations Manager

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