As filed with the Securities and Exchange Commission on September 25, 1996
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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 Number)
ONE NORWEST CENTER
1700 LINCOLN STREET, SUITE 1950
DENVER, COLORADO 80203
(303) 830-9000
(Address, including zip code, and telephone number, including area code, of
registrant's principal
executive offices)
DAVID A. FENNELL
GOLDEN STAR RESOURCES LTD.
ONE NORWEST CENTER
1700 LINCOLN STREET, SUITE 1950
DENVER, COLORADO 80203
(303) 830-9000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
Leonard V. Quigley LOUIS O. PELOQUIN
Edwin S. Maynard GOLDEN STAR RESOURCES LTD.
Paul, Weiss, Rifkind, Wharton & Garrison ONE NORWEST CENTER
1285 Avenue of the Americas 1700 LINCOLN STREET, SUITE 1950
New York, New York 10019-6064 DENVER, COLORADO 80203
(212) 373-3000 (303) 830-9000
BERNARD G. POZNANSKI PAUL HILTON
KOFFMAN BIRNIE & KALEF RONALD R. LEVINE, II
885 W. GEORGIA STREET DAVIS, GRAHAM & STUBBS LLP
VANCOUVER, BRITISH COLUMBIA V6C 3H4 370 SEVENTEENTH STREET
(604) 891-3688 DENVER, COLORADO 80202
(303) 892-9400
KENNETH G. OTTENBREIT
MARK E. BURTON
STIKEMAN, ELLIOTT
COMMERCE COURT WEST
53RD FLOOR, P.O. BOX 85
TORONTO, ONTARIO M5L 1B9
(416) 869-5500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement, as determined by
the Registrant.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box.[ x ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE REGISTERED BE REGISTERED(1) OFFERING PRICE AGGREGATE REGISTRATION
PER UNIT(2) OFFERING PRICE (3) FEE(3)
<S> <C> <C> <C> <C>
Common Shares(4)
Preferred Shares(5)
Convertible Debt Securities(6)
Warrants(7)
Total $75,000,000 100% $75,000,000 $25,863
</TABLE>
(1) In U.S. dollars or the equivalent thereof in one or more foreign currencies
or currency units or composite currencies, including the European Currency
Unit.
(2) The proposed maximum initial offering price per unit will be determined,
from time to time, by the Registrant.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering
price of all securities issued from time to time pursuant to this
Registration Statement exceed $75,000,000.
(4) Subject to Footnote (3), there are being registered hereunder an
indeterminate number of shares of Common Shares as may be sold from time to
time by the Registrant. There are also being registered hereunder an
indeterminate number of shares of Common Shares as may be issued upon
conversion of the Convertible Debt Securities or Preferred Shares or upon
exercise of the Warrants.
(5) Subject to Footnote (3), there are being registered hereunder an
indeterminate number of shares of Preferred Shares as may be sold from time
to time by the Registrant or as may be issued upon exercise of the
Warrants.
(6) Subject to Footnote (3), there are being registered hereunder an
indeterminate principal amount of Convertible Debt Securities as may be
sold from time to time by the Registrant or as may be issued upon exercise
of the Warrants. If any such Convertible Debt Securities are issued at an
original issue discount, then the offering price shall be in such greater
principal amount as shall result in an aggregate initial offering price of
up to $75,000,000.
(7) Subject to Footnote (3), there are being registered hereunder an
indeterminate number of Warrants as may be sold from time to time by the
Registrant.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
Subject to Completion, Dated September 25, 1996
GOLDEN STAR RESOURCES LTD.
COMMON SHARES
PREFERRED SHARES
CONVERTIBLE DEBT SECURITIES
WARRANTS
Golden Star Resources Ltd. (the "Company" or "Golden Star") may offer from
time to time (i) common shares without par value (the "Common Shares"), (ii)
first preferred shares (the "Preferred Shares") in one or more series, (iii)
convertible debt securities (the "Convertible Debt Securities"), consisting of
debentures, notes and/or other evidences of indebtedness representing unsecured
obligations of the Company convertible into Common Shares and (iv) warrants
(the "Warrants") to purchase Common Shares, Preferred Shares or Convertible
Debt Securities. The foregoing securities are collectively referred to as the
"Securities." Any Securities may be offered with other Securities or
separately. Securities may be sold for U.S. dollars, foreign currency or
currency units, including the European Currency Unit; amounts payable with
respect to any Convertible Debt Securities may likewise be payable in U.S.
dollars, foreign currency or currency units, including the European Currency
Unit, in each case, as the Company specifically designates. The amounts
payable by the Company in respect of Convertible Debt Securities may be
calculated by reference to the value, rate or price of one or more specified
commodities, currencies or indices as set forth in an accompanying Prospectus
Supplement. The Securities will be offered at an aggregate initial offering
price not to exceed U.S. $75,000,000 or the equivalent (based on the applicable
exchange rate at the time of sale) if Convertible Debt Securities of the
Company are issued in principal amounts denominated in one or more foreign
currencies or currency units as shall be designated by the Company.
SEE "RISK FACTORS" COMMENCING ON PAGE 9 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE SECURITIES.
This Prospectus will be supplemented by one or more accompanying Prospectus
Supplements, which will set forth with regard to the particular Securities in
respect of which this Prospectus is being delivered (i) in the case of Common
Shares, the number of Common Shares and the terms of the offering thereof,
(ii) in the case of Preferred Shares, the designation, aggregate principal
amount and stated value and liquidation preference per share, initial public
offering price, dividend rate (or method of calculation), dates on which
dividends shall be payable, any redemption or sinking fund provisions, any
conversion or exchange rights, whether the Company has elected to offer the
Preferred Shares as depositary shares, any listing of such Preferred Shares on
a securities exchange, and any other terms in connection with the offering and
sale of such Preferred Shares, (iii) in the case of Convertible Debt
Securities, title, aggregate principal amount, currency of denomination,
maturity, interest rate, if any (which may be fixed or variable), or method of
calculation thereof, time of payment of any interest, any terms for redemption
at the option of the Company or the holder, any terms for sinking fund
payments, any index or other method used to determine the amounts payable, the
ranking of such Convertible Debt Securities (whether senior, senior
subordinated or subordinated), any conversion rights, at the option of the
Company or the holder, any listing on a securities exchange, the initial public
offering price and any other terms in connection with the offering and sale of
such Convertible Debt Securities, and (iv) in the case of Warrants, the number
and terms thereof, the number of shares of Common Shares or Preferred Shares or
amount of Convertible Debt Securities issuable upon their exercise, the
exercise price, the periods during which the Warrants are exercisable, any
listing of such Warrants on a securities exchange and any other terms in
connection with the offering, sale and exercise of such Warrants. The
Prospectus Supplement will also contain information, as applicable, about
certain United States and Canadian Federal income tax considerations relating
to the Securities in respect of which this Prospectus is being delivered.
<PAGE>
The Company's Common Shares are traded on the American Stock Exchange
under the symbol "GSR" and The Toronto Stock Exchange under the symbol "GSC."
Each Prospectus Supplement will indicate if the Securities offered thereby will
be listed on any securities exchange.
The Company may sell Securities to or through one or more underwriters,
and may also sell Securities directly to other purchasers or through agents.
See "Plan of Distribution." Each Prospectus Supplement will set forth the
names of any underwriters, dealers or agents involved in the sale of the
Securities in respect of which this Prospectus is being delivered, the
principal amount, if any, to be purchased by any such Underwriters, and any
applicable fee, commission or discount arrangements with them.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is , 1996.
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<PAGE>
No dealer, salesman, or other person has been authorized to give any
information or to make any representations other than those contained in or
incorporated by reference in this Prospectus or in the Prospectus Supplement
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or any underwriter, agent or
dealer. Neither the delivery of this Prospectus or the accompanying Prospectus
Supplement nor any sale made hereunder shall create, under any circumstances,
an implication that there has been no change in the facts set forth in this
Prospectus or the accompanying Prospectus Supplement, or in the affairs of the
Company since such date. Neither this Prospectus nor the accompanying
Prospectus Supplement constitutes an offer to sell or a solicitation of an
offer to buy any securities other than the securities offered hereby, nor do
they constitute an offer to sell or solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction in which such offer or sale is
unlawful or not authorized or in any jurisdiction in which the person making
such offer or solicitation is not qualified to do so.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files,
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street N.W., Washington, D.C. 20549;
and at its regional offices located at Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511; and 13th Floor, 7 World Trade Center, New York,
New York 10048. Copies of such material can be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street N.W.,
Washington, D.C. 20549, at prescribed rates. The Company also is subject to
the information and reporting requirements of the securities regulatory
authorities of certain provinces of Canada and files similar reports, proxy
statements and other information with such authorities. Such reports, proxy
statements and other information concerning the Company also can be inspected
and copied at the offices of the American Stock Exchange, 86 Trinity Place, New
York, New York 10006 and the offices of The Toronto Stock Exchange, 2 First
Canadian Place, Toronto Ontario, Canada M5X 1J2. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the Commission's Web site is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect of the Securities covered by this Prospectus. This
Prospectus, which forms part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement, certain parts
of which have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and such
securities, reference is hereby made to such Registration Statement, including
the exhibits filed therewith. The Registration Statement and the exhibits
thereto can be obtained by mail from or inspected and copied at the public
reference facilities maintained by the Commission as provided in the prior
paragraph.
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<PAGE>
ENFORCEMENT OF CERTAIN CIVIL LIABILITIES
Golden Star Resources Ltd. is a corporation subsisting under the laws of
Canada and certain of its directors and officers, as well as certain of the
experts named herein, are neither citizens nor residents of the United States.
A substantial part of the assets of several of such persons and of the Company
are located outside the United States. As a result, it may be difficult for
investors to effect service of process within the United States upon such
persons or to enforce against them or the Company within the United States
judgment of courts of the United States predicated upon the civil liability
provisions of the federal securities laws of the United States. There is doubt
as to the enforceability against such persons and Golden Star Resources Ltd. in
Canada, in original actions or in actions to enforce judgments of United States
courts, of liabilities predicated solely upon the federal securities laws of
the United States.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference in this Prospectus:
(1) Annual Report on Form 10-K for the year ended December 31, 1995,
filed with the Commission on March 29, 1996, as amended by Amendment
to Annual Report on Form 10-K/A, filed with the Commission on
April 30, 1996.
(2) Current Reports on Form 8-K, filed with the Commission on January
10, 1996, February 7, 1996, March 4, 1996, April 2, 1996 and May 8,
1996.
(3) Quarterly Reports on Form 10-Q, filed with the Commission on May 15,
1996 and August 14, 1996.
(4) 1996 Proxy Statement and Information Circular for the 1996 Annual
Meeting of Shareholders, filed with the Commission on May 16, 1996.
(5) The description of the Common Shares contained in the Company's
Articles (incorporated by reference to Exhibit 1.1 to the Company's
Registration Statement on Form 20-F, filed on May 10, 1993).
(6) The Company's Shareholder Rights Plan included in the Company's
Current Report on Form 8-K, filed with the Commission on May 8,
1996.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the Offering
of the Securities offered hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the oral or written request of such person, a
copy of any or all of the documents incorporated herein by reference (other
than exhibits, unless such exhibits are specifically incorporated by reference
in such documents). Requests for such copies should be directed to
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<PAGE>
the Secretary, Golden Star Resources Ltd., One Norwest Center, 1700 Lincoln
Street, Suite 1950, Denver, Colorado 80203, (303) 830-9000.
References in this Prospectus to the term "Golden Star" or to the term
"Company" refer to Golden Star Resources Ltd. and its consolidated
subsidiaries, including, without limitation, Guyanor Resources S.A. ("Guyanor")
and Pan African Resources Corporation ("PARC"), unless the context otherwise
requires. Certain terms and measurements used herein are defined in "Glossary
of Terms" included in this Prospectus.
The information in this Prospectus is qualified in its entirety by the
more detailed information and consolidated financial statements and notes
thereto appearing in this Prospectus or incorporated by reference herein.
CANADIAN PROSPECTUSES
The Company intends to file with certain Canadian securities regulatory
authorities a shelf prospectus relating to the potential offering in Canada of
up to 5,000,000 common shares (including the Common Shares offered hereunder)
and a shelf prospectus relating to the potential offering in Canada of
convertible debt securities at an aggregate initial offering price of up to
U.S. $75,000,000 (including the Convertible Debt Securities offered hereunder).
Canadian securities laws do not permit the use of an unallocated (as between
common shares and debt securities) shelf prospectus.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus and any Prospectus Supplement
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-
looking statements involve known and unknown risks, uncertainties, and other
factors which may cause the actual results, performance, or achievements of the
Company to be materially different from any future results, performance, or
achievements express or implied by such forward-looking statements. Such
factors include, among others, gold and diamond exploration and development
costs and results, fluctuation of gold prices, foreign operations and foreign
government regulation, competition, uninsured risks, recovery of reserves,
capitalization and commercial viability and requirement for obtention of
permits and licenses. See "Risk Factors" and "Business and Properties."
REPORTING CURRENCY AND FINANCIAL INFORMATION
For the periods prior to May 15, 1992, the Company's reporting currency
was the Canadian dollar. In addition, the Company historically has raised most
of its equity capital in Canadian dollars. The Company's current reporting
currency is the United States dollar.
All amounts in this Prospectus and any Prospectus Supplement or
incorporated herein by reference are expressed in United States dollars, unless
otherwise indicated. References to (i) "Cdn" are to Canadian dollars, (ii)
"FF" are to French francs and (iii) "R" are to Brazilian reals.
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<PAGE>
Financial information is presented in accordance with generally accepted
accounting principles in Canada ("Canadian GAAP"). Differences between
generally accepted accounting principles in the United States ("U.S. GAAP") and
Canadian GAAP as applicable to the Company, are explained in Note 14 to the
Company's Consolidated Financial Statements incorporated by reference herein.
GOLD PRICES
The following table sets forth for the last ten years the high and low
selling prices of gold, as provided by the New York Commodities Exchange
("COMEX"):
YEAR HIGH LOW
1986 $441.10 $327.00
1987 $497.10 $392.10
1988 $487.00 $394.00
1989 $418.90 $358.10
1990 $422.40 $346.80
1991 $403.20 $344.30
1992 $359.30 $329.70
1993 $407.00 $326.30
1994 $398.00 $370.60
1995 $395.40 $371.20
The closing trading price per ounce of gold quoted by COMEX on September
20, 1996 was $381.20.
EXCHANGE RATES
The following table sets forth certain exchange rates based on the noon
buying rate in New York City for cable transfers as certified for customs
purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate").
Such rates are set forth as United States dollars per Cdn. $1.00 and are the
inverse of rates quoted by the Federal Reserve Bank of New York for Canadian
dollars per U.S. $1.00.
<TABLE>
<CAPTION>
Six months
ENDED JUNE 30, YEARS ENDED DECEMBER 31,
----------------- ---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1995 1994 1993 1992 1991
(U.S. $ per Cdn. $1.00)
High for period .7391 .7396 .7527 .7632 .8046 .8757 .8926
Low for period .7235 .7023 .7023 .7103 .7439 .7761 .8587
End of period .7322 .7279 .7323 .7128 .7544 .7865 .8652
Average for period (1) .7310 .7224 .7305 .7300 .7729 .8235 .8726
</TABLE>
__________________________
(1) The average of the exchange rates on the last day of each month in the
applicable period.
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<PAGE>
On September 20, 1996, the inverse of the Noon Buying Rate was Cdn. $1.00 =
U.S. $0.7310.
THE COMPANY
Golden Star is an international gold and diamond exploration company with a
diverse portfolio of active exploration and development projects and operating
mines in approximately ten countries on two continents. The Company's core
focus is on the acquisition, discovery and development of gold and diamond
projects. Once it identifies such projects, Golden Star's business strategy
is, if appropriate, to enter into partnership arrangements with major mining
companies to develop and operate mines. The Company currently has properties
in various stages of development in Guyana, French Guiana (through its
approximately 70% owned publicly traded subsidiary, Guyanor), Suriname, Brazil
and Bolivia in South America and Eritrea, Ethiopia, Gabon, Ivory Coast and Mali
in Africa (through its approximately 60% owned publicly traded subsidiary,
PARC).
Golden Star is a substantial mining exploration organization, with over 50
professional geologists on staff and over 600 individuals in the field. The
Company's estimated exploration spending for 1996, including funding provided
by its partners, is approximately $34.7 million. The Company's efforts are
concentrated in a geologic domain known as greenstone belts, which are ancient
volcanic-sedimentary rock assemblages. Greenstone belts are known to be
favorable geologic environments for gold mineralization and account for a
significant proportion of the world's historic gold production. The Company
began its exploration activities in 1985 in the tropical, Proterozoic
greenstone belts of the Guiana Shield and more recently extended its activities
to the geologically related greenstone belts of the Brazilian Shield and the
West African Shield and finally to the greenstone belts of eastern Africa.
Golden Star was one of the first North American gold companies to become
actively involved in the search for gold and diamonds in Guyana, French Guiana
and Suriname in South America and Eritrea, Ethiopia and Ivory Coast in Africa.
As a result, the Company has built a significant portfolio of prospective
exploration acreage on a cost effective basis. In recognition of the Company's
exploration expertise and in competition with some of the world's major mining
companies, Golden Star was one of the first foreign companies to be awarded
exploration rights in Ethiopia and Eritrea and was the first foreign company
awarded the right to earn a 50% interest in a gold project owned by the
Brazilian state mining company, Companhia Vale do Rio Doce ("CVRD").
Exploration requires a different set of skills from those required for mine
operation. Therefore, Golden Star's business strategy is to focus exclusively
on its core skills of gold and diamond exploration and property acquisition,
with the ultimate goal of holding significant ownership interests in large
scale gold and diamond mines. The Company believes that it can achieve the
greatest increase in shareholder value from the discovery and development,
rather than from the exploitation, of mineral resources. By entering into
partnership arrangements with major mining companies that have the technical
skills and financial resources to develop and operate major mines, the Company
also seeks to profit from the exploitation of the mineral resources that it
discovers. To date, the Company has funded its activities through the issuance
of equity securities and partner contributions and expects that these will be
its primary means of funding for the next
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several years. However, the Company's long-term objective is to fund
additional exploration and the development of new projects with the cash
flow from its mining interests.
Golden Star's initial exploration success in 1986 resulted in the
development of the Omai Gold Mine in Guyana, which commenced commercial
production in January 1993. The Omai Mine, in which the Company holds a 30%
equity interest, is one of South America's largest operating gold mines, with
proven and probable reserves of approximately 3.3 million ounces as of
December 31, 1995, after production of over 630,000 ounces. The Omai's Mine's
anticipated 1997 production is in excess of 300,000 ounces. In early 1997, the
Company expects to complete a final feasibility study on its second major
project, Gross Rosebel, located in Suriname. The Company currently estimates
total proven and probable reserves at Gross Rosebel to be approximately 1.1
million ounces and a substantial drilling program is underway to attempt to
delineate additional reserves. In September 1996, Guyanor and Golden Star
announced probable reserves at the Yaou project in French Guiana of
approximately 10.3 million tonnes grading 2.7 g Au/t, representing
approximately 876,000 ounces of gold IN SITU, which is part of total
mineralization of approximately 13 million tonnes grading 2.5 g Au/t. Cambior
Inc. ("Cambior") is a partner in each of these three projects.
Golden Star's partnership arrangements at Omai and Gross Rosebel are
illustrative of the Company's partnership strategy. Golden Star's partners
currently include ASARCO Incorporated ("ASARCO"), Broken Hill Proprietary Co.
Ltd. ("BHP"), Cambior, CVRD and LaSource Developpement S.A. ("LaSource").
Under a typical partnership arrangement with a major mining company, Golden
Star's partner funds a portion of the exploration to earn an interest in a
given project, prepares a feasibility study and manages the tasks and risks
involved in engineering, building and operating any mine which warrants
development. Certain of the Company's agreements also require its partner to
use its best efforts to provide debt financing for construction capital. This
strategy enables Golden Star to transfer a portion of the financial risks
associated with exploration and development to its partner, provides a means to
meet the majority of the financing requirements for project development and
allows the project to be built and managed by a company experienced in mine
development and operation. The Company's capital and its human resources then
can be focused on obtaining and advancing exploration on new properties,
thereby diversifying the Company's interests among a wide range of properties
at different stages of exploration and development.
Golden Star believes it is poised to rapidly advance a number of projects
by the end of 1997. The Company's objectives during this period include
(i) the completion of a final feasibility study at Gross Rosebel in Suriname
and, if positive, the commencement of mine construction, (ii) the commencement
of intensive exploration at Andorinhas in Brazil, (iii) the continuation of
drilling on the Yaou, Dorlin, St-Elie and Paul-Isnard gold projects in French
Guiana, at Dioulafoundou in Mali and at Dul Mountain in Ethiopia and (iv) the
continuation of bulk sampling at the Dachine diamond project in French Guiana.
The head office of the Company is located at One Norwest Center, 1700
Lincoln Street, Suite 1950, Denver, Colorado 80203; its telephone number is
(303) 830-9000. The Company's registered and records office is located at 19th
Floor, 885 West Georgia Street, Vancouver, British Columbia V6C 3H4; its
telephone number is (604) 891-3688.
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RISK FACTORS
PROSPECTIVE PURCHASERS OF SECURITIES SHOULD CAREFULLY READ THIS PROSPECTUS,
ANY PROSPECTUS SUPPLEMENT DELIVERED HEREWITH, AND THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN AND THEREIN. OWNERSHIP OF SECURITIES INVOLVES CERTAIN RISKS.
IN DETERMINING WHETHER TO PURCHASE SECURITIES, PROSPECTIVE INVESTORS SHOULD
CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS AND THE OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS, AS WELL AS THE OTHER RISK FACTORS AND INFORMATION
SET FORTH IN ANY PROSPECTUS SUPPLEMENT DELIVERED HEREWITH.
RISKS OF EXPLORATION AND DEVELOPMENT
Mineral exploration and development involves a high degree of risk and few
properties which are explored ultimately are developed into commercially
producing mines. The long-term success of the Company's operations will be
substantially and directly related to the cost and success of its exploration
programs. The risks associated with the exploration for new mineralization
include the identification of potential gold mineralization based on surficial
analysis, the attraction and retention of experienced geologists and drilling
personnel, the quality and availability of third party assaying, sampling
errors, geological, geophysical, geochemical and other technical analyses and
other factors. Substantial early stage expenditures are required to outline
mineralized prospects and establish ore reserves through, among other things,
drilling and the preparation of feasibility studies and mine plans, and to
develop and construct the mining and processing facilities at any site chosen
for mining. Although substantial benefits may be derived from the discovery of
a major mineralized deposit, no assurance can be given that (i) minerals will
be discovered in sufficient quantities and/or grades to constitute reserves or
justify commercial operations, (ii) the Company will be successful in
partnering with companies to develop and operate those properties that are
commercially attractive on acceptable or attractive terms or (iii) the funds
required for development can be obtained by the Company or any of its partners
on a timely or commercially reasonable basis. Further, even if reserves are
delineated, it may require a number of years and significant expenditures until
production is possible, during which time the economic feasibility of a
property may change. Additionally, the Company will be reliant on its partners
in each project for technical expertise in the development and operation phases
of the project, and, in certain instances, for financing, until cash flow is
generated from the property for the Company's account. Finally, to the extent
the Company's mineral reserves are produced and sold, the Company must
continually acquire new mineral prospects and explore for and develop new
mineral reserves to replace such reserves.
UNCERTAINTY OF RESERVE AND OTHER MINERALIZATION ESTIMATES
There are numerous uncertainties inherent in estimating proven and probable
reserves and other mineralization, including many factors beyond the control of
the Company. The estimation of reserves and other mineralization is a
subjective process and the accuracy of any such estimate is a function of the
quality of available data and of engineering and geological interpretation and
judgment. Results of drilling, metallurgical testing and production and the
evaluation of mine plans subsequent to the date of any estimate may justify
revision of such estimates. No assurance can be given that the volume and
grade of reserves recovered and rates of production will not be less than
anticipated. Assumptions about prices are subject to great uncertainty and
gold prices have fluctuated widely in the past. Declines in the market price
of gold or other precious metals also may render reserves or other
mineralization containing relatively lower grades of mineralization or
requiring more extensive processing uneconomic to exploit. If the price
realized by the Company for its gold bullion were to decline substantially
below the price at which ore reserves were calculated for a
9
<PAGE>
sustained period of time, the Company potentially could experience reductions
in reserves and asset write-downs. Under such circumstances, the Company
may discontinue the development of a project or mining at one or more of its
properties. Further, changes in operating and capital costs and other
factors, including but not limited to short-term operating factors such as the
need for sequential development of ore bodies and the processing of new or
different ore grades, may materially and adversely affect reserves.
FLUCTUATION OF PRICES
To the extent that the Company has any revenues from operations, such
revenues are expected to be in large part derived from the mining and sale of
gold. The price of gold can fluctuate, and in the past has fluctuated, widely
and is affected by numerous factors beyond the Company's control, including
international economic and political trends, inflation expectations, interest
rates, central bank sales and purchases, global or regional consumptive
patterns (such as the development of gold coin programs), speculative
activities and increased production due to new mine developments and improved
mining and production methods. The effect of these factors on the price of
gold cannot be accurately predicted.
The current demand for, and supply of, gold affect gold prices but not
necessarily in the same manner as current demand and supply affect the prices
of other commodities. The potential supply of gold consists of new mine
production plus existing stocks of bullion and fabricated gold held by
governments, financial institutions, industrial organizations and individuals.
Since mine production in any single year constitutes a very small portion of
the total potential supply of gold, normal variations in current production do
not necessarily have a significant effect on the supply of gold or on its
price. If gold prices should decline below the Company's cash costs of
production and remain at such levels for any sustained period, the Company
could determine that it is not economically feasible to continue commercial
production at any or all of its mines.
Moreover, on a given date, the prices used in estimating the Company's ore
reserves are based on the price of gold on such date. If the Company were to
determine that its reserves and future cash flows should be calculated at
significantly lower gold prices than those used on the measurement date, there
would likely be a material reduction in the amount of its gold reserves.
Should such reductions occur, material write-downs of the Company's investment
in mining properties may be required. See "Gold Prices."
CAPITALIZATION AND COMMERCIAL VIABILITY
The Company has limited financial resources. To date, and for the
reasonably foreseeable future, its exploration and development activities have
not generated and are not expected to generate substantial revenues, which has
caused, and is expected to continue for the reasonably foreseeable future to
cause, the Company to incur losses. In addition, the Company historically has
incurred significant expenditures in connection with its exploration activities
and contemplates doing so for the foreseeable future. There can be no
assurance that additional funding will be available to the Company for further
exploration or development of its properties or to fulfill its obligations
under any applicable agreements with its partners or the nations in which the
Company is operating. Although the Company has been successful in the past in
obtaining financing through the sale of equity securities and through
partnership arrangements involving several of the Company's properties, there
can be no assurance that the Company will be able to obtain adequate financing
in the future or that the terms of such financing will be favorable, or that
such partnership arrangements
10
<PAGE>
will continue to be available for the Company's properties on acceptable
terms. Failure to obtain such additional financing could result in delay or
indefinite postponement of further exploration and development of the
Company's properties with the possible loss of the Company's interest in such
properties.
If the Company proceeds to production on a particular property, commercial
viability will be affected by certain factors that are beyond the Company's
control, including the specific attributes of the deposit (such as mineral
grade and stripping ratio), the fluctuation in metal prices, the costs of
constructing and operating a mine in a specific environment, processing and
refining facilities, the availability of economic sources of energy, adequacy
of water supply, adequate access, government regulations including regulations
relating to prices, royalties, duties, taxes, restrictions on production,
quotas on exportation of minerals, as well as the costs of protection of the
environment and agricultural lands. The occurrence of any such factors may
materially and adversely affect the Company's business, financial condition,
results of operations and cash flow.
MARKETABILITY OF DIAMONDS
The marketability of diamonds which may result from projects advanced by the
Company will be affected by numerous factors beyond the control of the Company.
These factors include market fluctuations, government regulations, including
regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting of diamonds and environmental protection. The exact
effect of these factors cannot be accurately predicted, but the combination of
these factors may result in the Company not receiving an adequate return on
invested capital. The price for diamonds is, among other things, based on the
size, cut, color and quality of individual diamonds sold and, to a lesser
extent, the market supply and demand for diamonds in general.
RISKS OF FOREIGN OPERATIONS
In certain countries in which the Company has mineral rights (whether held
directly or indirectly), there are certain laws, regulations and statutory
provisions which, as currently written, could have a material negative impact
on the ability of the Company to develop a commercial mine in such countries.
The range and diversity of such laws and regulations are such that the Company
could not adequately summarize them in this document. Through, among other
things, the negotiation of mineral agreements with the governments of these
countries, management of the Company intends to seek variances or otherwise to
be exempted from the provisions of these laws, regulations and/or statutory
provisions. There can be no assurance, however, that the Company will be
successful in obtaining such mineral agreements, that any such variances or
exemptions can be obtained on commercially acceptable terms or that such
agreements will be enforceable in accordance with their terms.
Further, many of the mineral rights and interests of the Company are subject to
government approvals, licenses and permits. Such approvals, licenses and
permits are, as a practical matter, subject to the discretion of the applicable
governments or governmental officials. No assurance can be given that the
Company will be successful in obtaining any or all of such approvals, licenses
and permits, will obtain them in a timely fashion or will be able to maintain
them in full force and effect without modification or revocation.
The Company's assets and operations are subject to various political, economic
and other uncertainties, including, among other things, the risks of war or
civil unrest, expropriation,
11
<PAGE>
nationalization, renegotiation or nullification of
existing concessions, licenses, permits, approvals and contracts, taxation
policies, foreign exchange and repatriation restrictions, changing political
conditions, international monetary fluctuations, currency controls and foreign
governmental regulations that favor or require the awarding of drilling
contracts to local contractors or require foreign contractors to employ
citizens of, or purchase supplies from, a particular jurisdiction. In
addition, in the event of a dispute arising from foreign operations, the
Company may be subject to the exclusive jurisdiction of foreign courts or may
not be successful in subjecting foreign persons to the jurisdiction of courts
in the United States or Canada. The Company also may be hindered or prevented
from enforcing its rights with respect to a governmental instrumentality
because of the doctrine of sovereign immunity. The Company has suspended its
operations in Sierra Leone due to the unstable political situation there and
has invoked the force majeure provisions of the contracts pertaining to its
Sierra Leone operations. Currently, it is not possible for the Company to
accurately predict such developments or changes of law or policy and which, if
any, of such developments or changes may have a material adverse impact on the
Company's operations.
REQUIREMENT FOR PERMITS AND LICENSES
The operations of the Company require licenses and permits from various
governmental authorities. Except as otherwise described in "Business and
Properties" herein or in documents incorporated by reference in this
Prospectus, management believes that the Company presently holds substantially
all necessary licenses and permits to carry on the activities which it
currently is conducting or expects to conduct in the near term under applicable
laws and regulations in respect of its properties, and also believes the
Company is presently complying in all material respects with the terms of such
laws, regulations, licenses and permits, although the Company is in breach of
certain provisions of such laws, regulations, licenses and permits from time to
time. Such licenses and permits are subject to modification or revocation as
discussed above in "Risks of Foreign Operations," as well as changes in
regulations and in various operating circumstances. While the Company does not
believe that any such breaches will have a material adverse effect on its
operations, there can be no assurance that the Company will be able to obtain
or maintain in force all necessary licenses and permits that may be required
for it to conduct further exploration or commence construction or operation of
mining facilities at properties under exploration or to maintain continued
operations at economically justifiable costs.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the services of certain key officers and employees,
including its Chief Executive Officer, its Chief Financial Officer, its General
Counsel and certain of its geologists. Competition in the mining exploration
industry for qualified individuals is intense, and the loss of any of these key
officers or employees if not replaced could have a material adverse effect on
the Company's business and its operations. The Company has entered into
agreements with certain of its officers which provide for payments upon
termination without cause or, in certain cases, upon a change in control of the
Company.
OPERATIONAL HAZARDS AND RESPONSIBILITIES
The business of gold mining is generally subject to a number of risks and
hazards, including environmental hazards, the discharge of pollutants or
hazardous chemicals, industrial accidents, labor disputes, encountering unusual
or unexpected geological or operating conditions, slope failures, cave-ins,
failure of pit walls or dams and fire, changes in the regulatory environment
and natural
12
<PAGE>
phenomena such as inclement weather conditions, floods and
earthquakes, as well as other hazards. Such occurrences could result in damage
to, or destruction of, mineral properties or production facilities, personal
injury or death, environmental damage, delays in mining, monetary losses and
possible legal liability. The Company or its subsidiaries or partnership
arrangements to which they are parties also may incur liability as a result of
pollution and other casualties. The Company may not be able to insure fully or
at all against such risks, due to political or other reasons, or the Company
may decide not to insure against such risks as a result of high premiums or for
other reasons. Such occurrences, against which it cannot insure, or may elect
not to insure, may delay production, increase production costs or result in
liability. Paying compensation for obligations resulting from such liability
may entail significant costs for the Company and may have an adverse effect on
the Company's financial position. Furthermore, insurance against certain risks
(including certain liabilities for environmental pollution or other hazards as
result of exploration and production) is not generally available to the Company
or to other companies within the industry.
MINING AND PROCESSING
The Company's business operations are subject to risks and hazards inherent in
the mining industry, including but not limited to unanticipated grade and other
geological problems, water conditions, surface or underground conditions,
metallurgical and other processing problems and mechanical equipment
performance problems, the unavailability of materials and equipment, accidents,
labor force and force majeure factors, unanticipated transportation costs and
weather conditions, and prices and production levels of by-products, any of
which can materially and adversely affect, among other things, the development
of properties, production quantities and rates, costs and expenditures and
production commencement dates. In addition, the Company relies upon its
partners to manage the development and operating stages of the projects in
which it has an interest and, therefore, has less control over such matters
than would be the case if the Company were the operator.
In the case of the Company's exploration properties, there generally is no
operating history upon which to base estimates of future operating costs and
capital requirements. The economic feasibility of any individual project is
based upon, among other things, the interpretation of geological data obtained
from drill holes and other sampling techniques, feasibility studies, which
derive estimates of cash operating costs based upon anticipated tonnage and
grades of ore to be mined and processed, the configuration of the ore body,
expected recovery rates of metals from the ore, comparable facility and
equipment costs, anticipated climatic conditions, estimates of labor
productivity and other factors. Such exploration properties also are subject
to the successful completion of final feasibility studies, issuance of
necessary permits and receipt of adequate financing. Accordingly,
uncertainties related to operations are magnified in the case of exploration
properties.
As a result of the foregoing risks, expenditures on any and all projects,
actual production quantities and rates and cash operating costs, among other
things, may be materially and adversely affected and may differ materially from
anticipated expenditures, production quantities and rates, and costs, just as
estimated production dates may be delayed materially, in each case, especially
to the extent exploration properties are involved. Any such events can
materially and adversely affect the Company's business, financial condition,
results of operations and cash flows.
13
<PAGE>
COMPETITION
The Company competes with major mining companies and other natural resource
companies in the acquisition, exploration, financing and development of new
properties and projects. Many of these companies are more experienced, larger,
and better capitalized than the Company. The Company's competitive position
will depend upon its ability to successfully and economically explore, acquire
and develop new and existing mineral resource properties or projects. Factors
which allow producers to remain competitive in the market over the long term
are the quality and size of the ore body, cost of production and operation
generally, and proximity to market. The Company also competes with other
mining companies for skilled geologists, geophysicists and other technical
personnel, which may result in higher turnover and greater labor costs for the
Company.
CURRENCY
The Company historically has raised most of its equity capital in Canadian
dollars, primarily maintains its accounts in U.S. dollars and converts such
U.S. dollars into various local currencies on an as needed basis in order to
conduct local operations. The Company currently maintains all or the majority
of its working capital in U.S. dollars or U.S. dollar denominated securities
and converts funds to foreign currencies as payment obligations come due.
Accordingly, the Company is subject to fluctuations in the rates of currency
exchange between the U.S. dollar and these currencies, and such fluctuations
may materially affect the Company's financial position and results of
operations. The Company currently has future obligations which are payable in
French francs and Brazilian reals and receivables payable in French francs.
The Company currently does not actively take steps to hedge against such risks.
GOVERNMENTAL REGULATIONS
Management believes that compliance with existing regulations in the
jurisdictions in which the Company operates which are applicable to the
discharge of materials into the environment, or otherwise relating to
environmental protection, will not have a material adverse effect on the
Company's exploration activities, earnings, expenditures or competitive
position. However, there can be no assurance that this will always be the
case. New or expanded regulations, if adopted, could affect the exploration or
development of the Company's mining projects or otherwise have a material
adverse effect on the operations of the Company.
USE OF PROCEEDS
Unless a Prospectus Supplement indicates otherwise, the net proceeds to be
received by the Company from the issue and sale from time to time of the
Securities will be added to the general funds of the Company to be used to
finance the Company's operations and for other general corporate purposes.
Pending such application, such net proceeds may be invested in short-term
investment grade marketable securities. Each Prospectus Supplement will
contain specific information concerning the use of proceeds from the sale of
Securities to which it relates.
14
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges{(1)} for the Company and its
subsidiaries was as follows for the six months ended June 30, 1995 and 1996,
the years ended December 31, 1995, 1994 and 1993, the periods from May 16, 1992
to December 31, 1992 and July 1, 1991 to May 15, 1992 and the year ended June
30, 1991:
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED PERIOD FROM PERIOD FROM
ENDED JUNE 30, DECEMBER 31, MAY 16, 1992 JULY 1, 1991 YEAR ENDED
1996 1995 1995 1994 1993 TO DECEMBER 31, 1992 TO MAY 15, 1992 JUNE 30, 1991
---- ------ ----- ---- ---- -------------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
N/M N/M N/M N/M N/M N/M N/M N/M
</TABLE>
_______________________________
(1) The Company's projects are in the exploration or development stages. As
a result, the Company has reported net losses for each of the periods
presented, except for the six months ended June 30, 1996 for which it
reported a gain due to the issuance of common shares by PARC. The
Company has not had any material fixed charge obligations for each of
the periods presented. Therefore, the ratio of earnings to fixed
charges for the Company is not meaningful ("N/M") under both U.S.
GAAP and Canadian GAAP.
15
<PAGE>
BUSINESS AND PROPERTIES
CERTAIN STATEMENTS IN "BUSINESS AND PROPERTIES" CONSTITUTE "FORWARD-LOOKING
STATEMENTS" UNDER THE REFORM ACT. ACTUAL RESULTS AND THE TIMING OF CERTAIN
EVENTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS DUE TO A NUMBER OF FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK
FACTORS" AND ELSEWHERE IN THIS PROSPECTUS. SEE "SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS" IN THIS PROSPECTUS. THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION,
DESCRIPTIONS AND CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO APPEARING
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
GENERAL
Golden Star is an international gold and diamond exploration company with a
diverse portfolio of active exploration and development projects and operating
mines in ten countries on two continents. The Company's core focus is on the
acquisition, discovery and development of gold and diamond projects. Once it
identifies such projects, Golden Star's business strategy is, if appropriate,
to enter into partnership arrangements with major mining companies to develop
and operate mines. The Company currently has properties in various stages of
development in Guyana, French Guiana (through its approximately 70% owned
publicly traded subsidiary, Guyanor), Suriname, Brazil and Bolivia in South
America and Eritrea, Ethiopia, Gabon, Ivory Coast and Mali in Africa (through
its approximately 60% owned publicly traded subsidiary, PARC).
Golden Star is a substantial mining exploration organization, with over 50
professional geologists on staff and over 600 individuals in the field. The
Company's estimated exploration spending for 1996, including funding provided
by its partners, is approximately $34.7 million. The Company's efforts are
concentrated in a geologic domain known as greenstone belts, which are ancient
volcanic-sedimentary rock assemblages. Greenstone belts are known to be
favorable geologic environments for gold mineralization and account for a
significant proportion of the world's historic gold production. The Company
began its exploration activities in 1985 in the tropical, Proterozoic
greenstone belts of the Guiana Shield and more recently extended its
activities to the geologically related greenstone belts of the Brazilian
Shield and the West African Shield and finally to the greenstone belts of
eastern Africa.
Golden Star's initial exploration success in 1986 resulted in the
development of the Omai Gold Mine in Guyana, which commenced commercial
production in January 1993. The Omai Mine, in which the Company holds a 30%
equity interest, is one of South America's largest operating gold mines, with
proven and probable reserves of approximately 3.3 million ounces as of
December 31, 1995, after production of over 630,000 ounces. The Omai Mine's
anticipated 1997 production is in excess of 300,000 ounces. In early 1997, the
Company expects to complete a final feasibility study on its second major
project, Gross Rosebel, located in Suriname. The Company currently estimates
total proven and provable reserves at Gross Rosebel to be approximately 1.1
million ounces and a substantial drilling program is underway to delineate
additional reserves. In September 1996, Guyanor and Golden Star announced
probable reserves at the Yaou project in French Guiana of approximately
10.3 million tonnes grading 2.7 g Au/t, representing approximately 876,000
ounces of gold IN SITU, which is part of total mineralization of approximately
13 million tonnes grading 2.5 g Au/t. Cambior is a partner in each of these
three projects.
Golden Star believes it is poised to rapidly advance a number of projects
by the end of 1997. The Company's objectives during this period include
(i) the completion of a final feasibility study
16
<PAGE>
at Gross Rosebel in Suriname
and, if positive, the commencement of mine construction, (ii) the commencement
of intensive exploration in Andorinhas in Brazil, (iii) the continuation of
drilling on the Yaou, Dorlin, St-Elie and Paul Isnard gold projects in French
Guiana, at Dioulafoundou in Mali and at Dul Mountain in Ethiopia, and (iv) the
continuation of bulk sampling at the Dachine diamond project in French Guiana.
Golden Star also has created two publicly traded subsidiaries. Guyanor
is approximately 70% owned by Golden Star and is incorporated under the laws of
France. Guyanor was established in order to comply with French Guiana law
requiring a mining company to be a French company. Guyanor's Class B common
shares are listed on The Toronto Stock Exchange under the symbol "GRL.B." PARC
is approximately 60% owned by Golden Star and was created in recognition of the
unique risk profile of establishing exploration projects across Africa. PARC's
common shares are quoted on the Canadian Dealing Network under the symbol
"PARC."
BUSINESS STRATEGY
Golden Star's business strategy is to focus on its core skills of gold
and diamond exploration and property acquisition with the ultimate goal of
holding significant interests in large scale gold and diamond mines. Golden
Star's business strategy is comprised of the following elements:
* FOCUS ON EXPLORATION. Golden Star believes that the greatest increase
in shareholder value in the gold and diamond mining sector comes from the
discovery of mineral deposits. The Company intends to continue to
concentrate its exploration efforts in its areas of expertise, gold and
diamond exploration in the tropical greenstone belts of the Guiana
Shield, the Brazilian Shield, the West African Shield and the greenstone
belts of eastern Africa.
* CONCENTRATE ON CURRENT PORTFOLIO OF PROPERTIES. Golden Star intends
to focus its efforts on advancing the most promising projects within its
current portfolio of properties to the feasibility stage. The Company
continues to pursue new opportunities and may make selective additional
acquisitions of promising properties.
* PARTNER WITH MAJOR MINING COMPANIES. Golden Star intends to continue
to leverage its exploration capital by entering into partnership
arrangements with major mining companies that have the technical skills
and financial resources to develop and operate large modern mining
operations. This strategy enables the Company to transfer a portion of
the financial risks associated with exploration and development to its
partners and to utilize a greater portion of its funds to explore and
develop additional projects.
* MAINTAIN A STRONG LOCAL PRESENCE IN THE COUNTRIES WHERE GOLDEN STAR
OPERATES. Golden Star intends to continue its practice of locating
offices, the majority of its employees and certain of its executives in
the countries where Golden Star has exploration, development and mining
interests. Many of the Company's employees are from the countries in
which Golden Star operates. The Company believes that its local presence
and hiring practices support its exploration efforts by enabling the
Company to establish and maintain relationships with local government
officials and business leaders. In addition, Golden Star believes that
its
17
<PAGE>
decentralized local management structure permits it to make better
informed exploration and management decisions.
[MAP OF CERTAIN SOUTH AMERICAN PROJECT
LOCATIONS OF GOLDEN STAR RESOURCES LTD. AND
GUYANOR RESOURCES S.A.]
[MAP OF CERTAIN AFRICAN PROJECT LOCATIONS OF
PAN AFRICAN RESOURCES CORPORATION]
The following table is a guide to Golden Star's current portfolio of mineral
properties. The nature of the exploration business is such that this
information changes continually as new properties are identified and acquired,
and existing ones mature for development, are sold or are released.
<TABLE>
<CAPTION>
1996 Estimated
Expenditures
Property Area ($ MILLIONS)(3)
COUNTRY (PERCENT OWNED)(1) (HECTARES) STATUS(2)
<S> <C> <C> <C> <C>
SOUTH AMERICA
Guyana (4) Omai (30%) 5,200 Producing mine N/A
Other (100%) 1,647,300 Exploration - early and $5.2
intermediate stages
Suriname (4) Gross Rosebel (40-50%) 17,000 Prefeasibility study completed; $7.5
Other (75-100%) final feasibility study in process
350,993 Exploration - early stage $3.2
French Yaou (50%) 15,000 Prefeasibility study in process $1.5
Guiana (5) Dorlin (50%) 15,000 Exploration - advanced stage $1.5
St-Elie (50%) 9,900 Exploration - advanced stage $1.6
Paul-Isnard (37.5%) 25,100 Exploration - advanced stage $0.7
Dachine (31.5-49%) 2,500 Exploration - intermediate stage $1.1
Other 2,500 Exploration - early and $0.3
intermediate stages
Brazil (4) Andorinhas (50%) 25,000 Exploration - advanced stage $3.3
Other 30,000 Exploration - early stage $1.3
Other South Bolivia 14,600 Exploration - early stage $1.1
America (4)
AFRICA
Ethiopia (6) Dul Mountain (100%) 180,100 Exploration - advanced stage $1.8
Mali (6) Dioulafoundou (85%) 3,400 Exploration - advanced stage $0.8
Other 22,000 Exploration - early stage $ 0
18
<PAGE>
Other Other (7) 790,000 Exploration - early and $3.8
Africa (6) intermediate stages
-----
TOTAL $34.7
</TABLE>
_________________________
(1) Percentages identified are the percentages Golden Star would own assuming
either the Company or each of its partners achieves the maximum
percentage ownership permissible under the applicable partnership
arrangement. Percentages currently owned by Golden Star may be higher or
lower. See "-Properties" and the Company's Annual Report on Form 10-K
and other documents incorporated by reference herein for a discussion of
such potential changes and for additional information on the Company's
properties and the ownership interests.
(2) See "Glossary of Terms."
(3) Estimated aggregate expenditures by the Company and its partners.
(4) Properties in this country are owned by Golden Star Resources Ltd. or a
wholly owned subsidiary of Golden Star Resources Ltd.
(5) Properties in this country are owned by Guyanor, which is approximately
70% owned by Golden Star Resources Ltd.
(6) Properties in these countries are owned by Golden Star or by PARC, which
is approximately 60% owned by Golden Star Resources Ltd. Certain
properties have been transferred from Golden Star Resources Ltd. to PARC,
subject to the approval of the applicable government.
(7) Includes properties located in Eritrea (30,000 hectares), Gabon (363,000
hectares), Ivory Coast (375,000 hectares) and Mali (22,000 hectares).
PROPERTIES
The following is a description of the Company's significant gold and
diamond interests. For more information about these properties and the
Company's other mineral property interests, including with respect to the
ownership interests and funding obligations of third parties, see the Company's
1995 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for the
first and second quarters of 1996 incorporated by reference herein.
PRODUCING PROPERTIES
OMAI MINE, GUYANA
The Company owns a 30% common share equity interest in Omai Gold Mines
Ltd. ("OGML"), a company incorporated under the laws of Guyana which owns and
operates the Omai Mine. The mine is located on a 5,200 hectare mining license
on the Essequibo River approximately 160 kilometers southwest of Georgetown,
Guyana. The mine is operated as an equity joint venture between the Government
of Guyana, the Company and Cambior, the operator.
Cambior and the Government of Guyana own 65% and 5% of the common shares
of OGML, respectively. The Company and Cambior each has granted the Government
of Guyana options to acquire from them up to an additional 13.5% of the common
shares of OGML at capital market values, beginning in 2003.
19
<PAGE>
Golden Star currently receives cash flow from the Omai Mine at the rate of
10% of the after tax cash flow from the Omai Mine through the redemption of
Class I preferred shares in OGML. The Company received $1.2 million in 1995
through the redemption of Class I preferred shares and, as of June 30, 1996,
held approximately $8.4 million of Class I preferred shares. The Company does
not expect to receive dividends from its common share holdings in OGML until
debt owed by OGML and guaranteed by Cambior is repaid and Class II and III
preferred shares held by Cambior are redeemed. As of June 30, 1996, OGML had
$184.2 million in debt outstanding and a total of $53.1 million in Class II and
III preferred shares outstanding.
The Omai Mine was brought into commercial production in January 1993 and
currently is the Company's only significant producing property. Gold
production for 1993, 1994, 1995 and the first six months of 1996 totaled
206,537 ounces, 250,642 ounces, 175,080 ounces and 85,191 ounces, respectively.
Gold production in 1995 was significantly lower than the originally expected
amount of 250,000 ounces due primarily to the August 1995 tailings dam failure
and resulting lack of production for the remainder of 1995. Quarterly gold
production at the Omai Mine for 1995 and the first six months of 1996 was as
follows:
<TABLE>
<CAPTION>
1996 1995
------------------------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
First Second Second Third Fourth Total
Quarter (1) Quarter First Quarter Quarter Quarter(1) Quarter(1) 1995 (1)
------------------------- -------------------------------------------------------------------------
Ore milled (mt) 725,203 1,160,413 1,169,535 1,216,002 655,674 - 3,041,211
Rate (mt/day) 13,185 12,752 12,995 13,363 7,127 - 13,165
Grade (g Au/mt) 1.6 1.8 1.9 2.0 1.9 - 1.9
Recovery (%) 85 89 90 91 91 - 91
Gold production (oz) 27,204 57,987 64,435 70,005 40,640 - 175,080
Cash cost of $294 $281 $234 $220 $215 - $224
production (2) ($/oz)
</TABLE>
________________________
(1) There was no production at the Omai Mine from August 19, 1995 to
February 4, 1996 due to the Omai dam failure.
(2) Cash cost of production includes mining and milling costs, power
generation and general services charges.
Ore reserves at the Omai Mine are derived from four sources: the Fennell
pit, the Wenot Lake pit, the alluvial deposits and from above-ground
stockpiles. In 1995, ore was processed from each of these sources. The
average mined waste to ore ratio for 1995 was 1.98. At December 31, 1995, the
stockpiles held 10,094,000 tonnes grading 0.9 g Au/mt. Cash costs of
production at the Omai Mine for 1994 and 1995 amounted to $244 per ounce and
$224 per ounce, respectively.
The surface infrastructure at the Omai Mine includes a conventional
milling facility equipped with a grinding mill circuit and using the
cyanidation and carbon-in-pulp processes, camp facilities, administrative
offices, a warehouse, a maintenance shop and a laboratory. Electric power
currently is supplied by eight diesel generators having a total installed
capacity of 24 megawatts. The mine site also includes a tailings pond allowing
the natural degradation of the cyanide and decanting and recirculation of the
water used in milling.
20
<PAGE>
The 1996 production target for the Omai Mine is 255,000 ounces. The mill
currently is processing stockpiled ore and lower grade soft rock ore from the
Wenot pit. Mining of hard rock ore resumed in the Fennell pit upon completion
of dewatering during the second quarter. The Omai Mine expanded its rated mill
capacity from 12,000 to 18,000 tonnes per day through incremental additions in
grinding and power generating capacity which were completed in July 1996. As a
result of the $54 million expansion program, annual production rates at the
Omai Mine in excess of 300,000 ounces are expected, beginning in 1997.
The Omai Mine has registered an increase in reserves every year since
operations began, exclusive of the gold that has been mined. Total reserves
have grown from 2.3 million ounces at year end 1992 to 3.3 million ounces at
year end 1995, after production of over 630,000 ounces. The increase in
minable gold reserves for 1995 was the greatest year on year increase to date,
representing a 24% increase over year end 1994, exclusive of production during
1996. Importantly, the overall grade of the reserves at both the Fennell and
Wenot pit registered improvements. Drilling is continuing in 1996 in the East
Wenot pit section on a geochemical anomaly more than 1.2 kilometers long,
with the intention of further increasing reserves during 1996. The
reserves{(1)} at year-end 1995 and 1994 were estimated as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------------------------- -----------------------------------
Proven and Grade Contained Proven and Grade Contained
Probable (g Au/mt) Gold (oz) Probable (g Au/mt) Gold
Reserves Reserves (oz)
(mt) (mt)
----------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fennell Pit 43,450,000 1.6 2,217,800 39,977,000 1.5 1,937,000
Wenot Lake Pit 14,127,000 1.6 708,100 6,905,000 1.4 309,300
Alluvials 1,237,000 0.9 38,100 3,946,000 1.1 138,600
Stockpiles 10,094,000 0.9 296,600 7,805,000 1.0 240,900
----------------------------------- -----------------------------------
TOTAL 68,908,000 1.5 3,260,600 58,633,000 1.4 2,625,800
=================================== ===================================
</TABLE>
________________________
(1) Reserves are calculated using a gold price of $405 per ounce with
a cutoff grade of 0.35 g Au/t for soft rock reserves and
0.70 g Au/t for hard rock reserves. Recovery rates range between
85% abd 90%, depending on grade.
On August 19, 1995, a failure occurred in the main section of the tailings
dam at the Omai Mine. The failure resulted in the discharge of effluent-
contaminated water into the Omai River, which in turn flowed into the Essequibo
River. The discharge began on August 19, 1995 and continued until the leakage
was controlled by Omai personnel on August 24, 1995. To minimize environmental
damage, a portion of the discharged water was diverted into the Fennell Pit,
the main source of ore at the Omai Mine. Production at the Omai Mine was
suspended from August 19, 1995 until February 4, 1996.
In October 1995, the Government of Guyana appointed a Commission of
Inquiry to examine various matters arising from the dam failure. Its report
stated that the Commission of Inquiry could see no justifiable reason for OGML
not being permitted to resume production at the Omai Mine. The Commission of
Inquiry also made a number of recommendations in its report relating to, among
other things, the construction of the new tailings pond, the treatment of water
before its release into receiving waters, the reclamation and closure of the
former tailings pond and the implementation of other environmental safeguards.
Operations at the Omai Mine resumed on February 4, 1996.
21
<PAGE>
OTHER PRODUCING PROPERTIES
The Company currently has alluvial mining operations at the Paul-Isnard project
in French Guiana. See "- Development Properties - Paul-Isnard."
DEVELOPMENT PROPERTIES
GROSS ROSEBEL, SURINAME
The Gross Rosebel project covers 17,000 hectares and is located 80
kilometers south of the capital city of Paramaribo, Suriname. As of
December 31, 1995, a total of $12.9 million, including capitalized acquisition
costs, had been spent at Gross Rosebel since the Company's involvement with the
project, of which $6.6 million was funded by Cambior. The Company anticipates
that $7.5 million will be spent on the Gross Rosebel project in 1996, with
Cambior expected to fund $5.0 million of this amount.
Golden Star and Cambior each owns 50% of the Gross Rosebel project.
Cambior is obligated to use its best efforts to arrange debt financing for 65%
of mine construction and related costs, with Golden Star and Cambior each
contributing 50% of the remainder of such costs. In addition, Grassalco, a
mining company owned and operated by the government of Suriname, has the right
to purchase up to a 20% minority interest from Golden Star and Cambior (on a
pro rata basis) in the production company that will operate the mine, in which
case Grassalco will be obligated to fund its pro rata portion of mine
construction and related costs.
Gross Rosebel is composed of two contiguous areas known as the Northern
and Southern blocks. Geologically, the area is underlain by Proterozoic
metasedimentary and metavolcanic greenstone rocks which have been intruded by a
large tonalitic stock near the southern boundary of the project.
As part of a prefeasibility study completed in April 1996, the Company
calculated proven and probable gold reserves of approximately 24 million tonnes
grading 1.4 g Au/t, representing 1.1 million ounces IN SITU. These reserves
lie in the South block, containing the Royal Hill, Mayo and Rosebel deposits,
and the North block, containing the Pay Caro and Koolhoven deposits.
The 1996 exploration work is focused on drilling to better define and
expand the reserve and mineralization base within the five areas where reserves
have been established, as well as to identify potential new zones. During the
first six months of 1996, an additional 16,585 meters of drilling in 113 holes
and 13,312 linear meters of trenching has been completed on the North block of
the project. Mineralization was extended along strike on the Pay Caro and
East Pay Caro zones by approximately 450 meters, allowing existing open pit
plans to be widened and deepened. Results from this core drilling exhibited
average widths of mineralization of 8.1 meters with a weighted average grade of
2.4 g Au/t at Pay Caro and average widths of 9.6 meters with a weighted average
grade of 2.2 g Au/t at the East Pay Caro zone. Wide spaced, step out drilling
along the Koolhoven and Bigi Asanjangmoni trends has been successful, although
additional closer spaced drilling will be required to bring this mineralization
into the reserve category. Metallurgical test work conducted during the
prefeasibility study has indicated recoveries in excess of 90% using
conventional gravity and cyanide leaching recovery methods.
An additional 18,691 meters of drilling within the North block and the
South block of the Gross Rosebel project are budgeted for the remainder of
1996 with the objective of significantly
22
<PAGE>
increasing open pittable reserves for
the final feasibility study. The Company expects the final feasibility study
at Gross Rosebel to illustrate economics that would justify a development
decision at current gold prices, given the nature of the bulk of the ore body,
simple metallurgy and good infrastructure for mine development, including
nearby port facilities and road access.
EXPLORATION PROPERTIES
YAOU, FRENCH GUIANA
The Yaou project, owned through Guyanor, covers a total area of 15,000
hectares and is located approximately 210 kilometers southwest of Cayenne,
French Guiana. Yaou is the most advanced of Guyanor's exploration projects and
a significant amount of exploration work has been conducted on the property.
As of December 31, 1995, a total of $10.3 million, including capitalized
acquisition costs, had been spent at Yaou since the Company's involvement with
the project, of which $3.3 million was funded by Cambior. The Company
anticipates that $1.5 million will be spent on the Yaou project in 1996, all of
which is expected to be funded by Cambior.
The Yaou project is underlain by a typical greenstone sequence of the
Paramaca Formation. Within these rocks are two distinct units that host gold
mineralization generally associated with pyrite and quartz-carbonate veins and
veinlets.
During the first six months of 1996, an evaluation was completed using all
exploration data gathered at Yaou by both Guyanor and the previous owners, the
French Bureau de Recherches G<e'>ologiques et Mini<e`>res ("BRGM") and BHP,
with the purpose of developing a new geologic model of the known mineralized
area. On September 11, 1996, Guyanor and Golden Star announced the results of
this work. A reserve estimation was completed on the Yaou Central and Chaina
zones based results from 130 drill holes for a total of 24,416 meters,
approximately 40,000 meters of augering and approximately 10 kilometers of
trenching. The estimation calculated a probable reserve of approximately 10.3
million tonnes grading 2.7 g Au/t, representing approximately 876,000 ounces of
gold IN SITU. The probable reserve is part of total mineralization of
approximately 13 million tonnes grading 2.5 g Au/t.
The exploration program for the remainder of 1996 is focused on
establishing proven mining reserves based upon the above mentioned probable
reserves and mineralized inventory, as well as establishing new zones of
mineralization. Some 4,300 meters of drilling is scheduled to be completed
during the remainder of 1996 on both Yaou Central and Chaina for infill
drilling and testing lateral and depth extensions as well on additional targets
to the northeast of Yaou Central (Zones I, J and K) to identify new
mineralization minable by open pit. Guyanor also plans to conduct additional
exploration over the project area, with an initial focus on the Bois Blanc
target approximately 10 kilometers to the north of Yaou Central. In addition
to the Bois Blanc target, there are two other known zones of gold
mineralization which warrant follow-up work, Yaou Nord and Tomantoni. To date,
less than 15% of the Yaou project area has been evaluated.
The Yaou and Dorlin gold projects are being advanced under an agreement
with Cambior, pursuant to which Cambior must fund in the aggregate $11.0
million on the two properties by June 30, 1998 in order to earn a 50% interest
in each project. Cambior also is obligated to use its best efforts to arrange
debt financing for 65% of mine financing costs, with Guyanor and Cambior each
contributing 50% of the remainder of such costs. Guyanor is to manage the
exploration of
23
<PAGE>
the properties and Cambior is to prepare a feasibility study on
the properties and to manage the development and operation of future mining
operations.
DORLIN, FRENCH GUIANA
The Dorlin project, owned through Guyanor, covers a total area of 15,000
hectares and is located approximately 180 kilometers southwest of Cayenne,
French Guiana. As of December 31, 1995, a total of $1.6 million, including
capitalized acquisition costs, had been spent at Dorlin since the Company's
involvement with the project, of which $1.0 million was funded by Cambior. The
Company anticipates that $1.5 million will be spent on the Dorlin project in
1996, all of which is expected to be funded by Cambior.
The Dorlin project is underlain by a volcano-sedimentary sequence of the
Paramaca Formation and is intruded by younger granitic intrusive rocks.
In August 1996, Guyanor announced the results of approximately 2,000
meters of drilling in 31 holes as well as the recompilation and integration of
results from 19 holes totaling 4,323 meters drilled by the BRGM and BHP in
1986. Guyanor's drilling focused on the Sud Nivre zone on a prominent ridge
known as Montagne Nivre while the BRGM-BHP drilling focused on the West Nivre
zone to the north of Sud Nivre and on the west flank of Montagne Nivre.
Guyanor established two zones of mineralization approximately 40 to 50 meters
wide over a strike length of approximately 750 meters. Mineralization was
encountered in approximately 74% of the core holes drilled by Guyanor,
exhibiting average widths of 9.8 meters at a weighted average grade of 1.9 g
Au/t. Drilling conducted by the BRGM and BHP on the West Nivre zone and across
the northern extension of the zones drilled by Guyanor encountered
mineralization in approximately 79% of the core holes drilled, exhibiting
average widths of 9.9 meters at a weighted average grade of 1.9 g Au/t.
Current and past drilling results have indicated mineralization over a strike
length of approximately 1.5 kilometers on the far southern end of a major
hydrothermal breccia system which has been identified continuously over five
kilometers and discontinuously over an additional 4 kilometers.
During the second half of 1996, Guyanor plans to mobilize a second, larger
drill rig to test the Sud Nivre zone at greater depth, test the extension of
the system to the north and conduct infill drilling on the zones drilled by the
BRGM and BHP.
ANDORINHAS, BRAZIL
The Andorinhas project covers approximately 25,000 hectares and is located
in the state of Par<a'> in the eastern Amazon area, approximately 670
kilometers south-southwest of the city of Belem, Brazil. Andorinhas is the
single largest item in Golden Star's 1996 exploration budget, with planned
expenditures of $3.3 million.
In December 1995, CVRD, the largest individual producer of gold in Latin
America, awarded the Company the right to associate with CVRD for the possible
future development and exploitation of the Andorinhas gold property in Brazil.
The Andorinhas tender represented CVRD's first effort to secure outside
partners to assist in the development of CVRD's gold resource potential in
Brazil. Under the agreement with CVRD and subject to final approval of the
Brazilian government, the Company must match CVRD's previous exploration
expenditures of approximately $5.5 million, as well as pay 50% of any
additional costs required to complete a positive feasibility study, in order to
earn a 50% interest in the Andorinhas project.
24
<PAGE>
Andorinhas is an advanced stage exploration project. Gold mineralization
was discovered at Andorinhas in the late 1970s by Rio Doce Geologia e Mineracao
S.A., CVRD's exploration subsidiary. The geologic setting and mineralization
of discoveries in the area share the same characteristics of many of the
notable underground mines in the Abitibi mineral province in Canada, such as
the Campbell Red Lake mine, with high grade gold-quartz vein mineralization
occurring in multiple zones. Surface work and approximately 15,000 meters of
drilling by CVRD in the late 1970s identified three primary zones of interest,
Mamao and Babacu along a 14 kilometer shear zone trending northeast-southwest
through the southern leg of the property and Lagoa Seca on a parallel 8
kilometer shear zone to the north. The results averaged 2.7 meters at 17.1 g
Au/t from 11 holes at the Mamao prospect, 19.8 meters at 4.7 g Au/t from 9
holes at the Lagoa Seca prospect and 2 meters at 8.1 g Au/t from 6 holes at
Babacu.
In the early 1980s, the Andorinhas area experienced a significant influx
of garimpeiros (illegal miners) who mined multiple surface zones of enriched
mineralization along the shear zones. Garimpeiro mining ceased in the mid
1980s as the price of gold fell and pits from the surface mining of gold
bearing material began to encounter the water table. One of the few
garimpeiros who remained developed an underground decline 240 meters down
plunge to exploit the primary structure on the Mamao zone. Sampling by the
Company of the underground decline indicated values in mineralization not mined
ranging from 2.3 meters at 16.7 g Au/t to 2.4 meters at 69.7 g Au/t. Mine head
grades of greater than 40 g Au/t were reported prior to the recent shutdown of
the underground operations. The Mamao zone itself remains open at depth.
The Company has initiated and is the manager of an aggressive 30-month
program at Andorinhas to expand the known mineralized zones and delineate new
ones. The objective of the 30-month program is to delineate a high grade gold
mineralization of at least one million ounces as rapidly as possible, while
evaluating the potential for similar targets over the extent of major shears
zones which have not been explored. CVRD has the right to act as the operator
of any mine that may result from the exploration efforts. Detailed underground
and surface geologic mapping and geochemical sampling have been completed on
the principal prospects, while surface sampling and mapping continues over the
remainder of the property to identify new targets. An airborne aeromagnetic,
EM and radiometric survey on 100 meter line spacing has been completed over the
entire property. A 12,000 meter drilling program is scheduled to begin in the
second half of 1996, focusing initially on the Mamao zone.
ST-ELIE, FRENCH GUIANA
The St-Elie project, owned through Guyanor, covers a rectangular area of
9,900 hectares located in north central French Guiana, 110 kilometers west of
Cayenne, French Guiana. As of December 31, 1995, a total of $3.2 million,
including capitalized acquisition costs, had been spent at St. Elie since the
Company's involvement with the project, of which $1.2 million was funded by
ASARCO. The Company anticipates that $1.6 million will be spent on the St-Elie
project in 1996, all of which is expected to be funded by ASARCO.
ASARCO has a 50% equity interest in the St-Elie project, subject to its
spending $10 million for development of the property, including the completion
of a feasibility study, by February 2000. ASARCO, at Guyanor's request, is
obligated to use its best efforts to obtain financing on a project finance
basis for 80% of project development costs, with Guyanor and ASARCO each
contributing 50% of the remainder of such costs. ASARCO may decide at any time
to terminate its obligations under the agreements with Guyanor and stop funding
the St-Elie project, which will result in the
25
<PAGE>
forfeiture of its interest in St-Elie. Guyanor will be the operator of the
exploration effort at St-Elie prior to the completion of the final
feasibility study, at which time ASARCO has the right to assume the position
of operator.
The first gold discoveries in the St-Elie region were made in 1873, and
between 1878 and 1923 more than 600,000 ounces of gold reportedly were mined
from alluvial and eluvial deposits, using mainly hydraulic methods. From 1956
to 1993, mining activities on the project were intermittent and consisted only
of local, small scale alluvial operations.
To the Company's knowledge, gold extracted to date from the St-Elie,
Michel and Devis sectors of the project was from both alluvials and weathered
bedrock. Other sources of gold which have been identified include recent and
ancient alluvial deposits, re-worked lateritic deposits, eluvial and surficial
deposits and mining residues. However, on the basis of present knowledge of
the areas, bedrock sources appear to be the most promising and the most
recommended for exploration.
Extensive exploration work began at St-Elie in late October 1995.
Geological, geochemical and geophysical work completed in 1995 identified nine
primary drill targets on the property. During the first half of 1996, 34 holes
were drilled, totalling 4,982 meters, on the Devis and Michel zones of the
property. In May 1996, Guyanor completed 23 holes for 3,202 meters in the
Devis zone. Mineralization was encountered in approximately 57% of the core
holes drilled, illustrating a mineralized zone approximately 550 meters in
length by 200 meters wide and exhibiting average intersection widths of 8.5
meters at a weighted average grade of 2.6 g Au/t. In July 1996, Guyanor
completed an initial 11 hole, 1,780 meter drilling campaign in the Michel zone
over an area of mineralization approximately 1.2 kilometers in length by
200 meters wide. At the Michel zone, mineralization was encountered in
approximately 82% of the core holes drilled, with average intersection widths
of 4.3 meters at a weighted average grade of 3.9 g Au/t. For the remainder of
1996, Guyanor expects to focus work at St-Elie on continued surface mapping,
preparation of 80-90 drill sites for 1997 drilling and improvements to road
access.
PAUL-ISNARD, FRENCH GUIANA
The Paul-Isnard project area, which includes both the Paul-Isnard and Eau-
Blanche projects, is owned through Guyanor. The Paul-Isnard project area is
located in the western part of French Guiana, approximately 250 kilometers west
of Cayenne, and covers 25,000 hectares. Guyanor's interest in the Paul-Isnard
project area is held by its subsidiary, Soci<e'>t<e'> de Travaux Publics et de
Mines Aurif<e`>res en Guyane ("SOTRAPMAG"), a soci<e'>t<e'> <a`>
responsibilit<e'> limit<e'>e incorporated under the laws of France and based in
French Guiana. As of December 31, 1995, a total of $5.5 million, including
capitalized acquisition costs of $4.0 for both the alluvial mining project and
the hard rock mineral projects, had been spent at the Paul-Isnard project area,
of which $0.7 million was funded by ASARCO. The Company anticipates that $0.7
million will be spent on the Paul-Isnard project area in 1996, all of which is
expected to be funded by ASARCO and LaSource.
Guyanor has entered into a joint venture agreement to give LaSource a 25%
participating interest in the exploration and exploitation of primary gold
deposits on the Paul-Isnard and Eau-Blanche projects. Pursuant to the same
joint venture agreement, ASARCO has two separate options to acquire a 50%
interest in Guyanor's remaining interest in the primary deposits on each of the
Paul-Isnard and Eau-Blanche projects. In order to acquire its interests in one
of these projects, ASARCO is obligated, by June 2001, to complete a feasibility
study on the project and to spend at least $10 million on such project, or to
combine the Paul-Isnard and Eau-Blanche projects into a single joint
26
<PAGE>
venture and spend a combined $20 million. ASARCO also is obligated to use its
best efforts to obtain financing on a project finance basis for 80% of project
development costs, with Guyanor and ASARCO each contributing 37.5% and LaSource
contributing 25% of the remainder of such costs. Guyanor will act as project
manager for the exploration phase at the Paul-Isnard project area, while
ASARCO, once vested, has the right to act as the manager of any resulting
feasibility study and exploitation.
There are two prominent mountain chains bordering the Paul-Isnard project
area which form the edges of a basin in which alluvial gold deposits have
accumulated. The Company believes that this alluvial gold originated from
gold-bearing rocks from Decou-Decou and Lucifer mountains and was transported
downward by high-energy streams, concentrating the gold in the gravel beds of
streams in the Paul-Isnard project area. The alluvial gold deposits of the
Paul-Isnard project area have been known for almost a century and gold panning
was reported on a number of creeks which traverse the property. Mechanized
alluvial mining started in about 1910, with recorded production of over three
tons of gold.
The Company, through SOTRAPMAG, currently has three plants of various
configurations operating on the Paul-Isnard property, one of which is a fixed
plant located at Barth<e'>l<e'>my and two of which are mobile plants currently
located at Petit L<e'>zard and Reine Creek. In late 1995, the Company began an
aggressive alluvial exploration program to identify target areas and commenced
prospecting activities to quantify the potential for alluvial mining reserves.
The program is scheduled to be completed in 1996. Ore reserves are not stated
for the current alluvial operations at the Paul-Isnard project area as the data
for reserve estimation are not currently considered adequate to support the
calculation of ore reserves.
SOTRAPMAG's alluvial operations have experienced operating losses in 1996
as a result of a labor strike, the re-deployment of certain equipment for
construction of a new plant and heavy rainfall. Guyanor has retained outside
consultants to analyze SOTRAPMAG's operations and make recommendations on how
to render the operation profitable. There can be no assurance, however, that
it will be possible to return SOTRAPMAG's operations to profitability or that
management will not decide to close the alluvial operations.
To the Company's knowledge, little systematic exploration has been
conducted at the Paul-Isnard project area in search of primary gold.
Management believes that there are at least two virtually unexplored
occurrences which may constitute possible sources of alluvial gold on the
property. An airborne radiometric and magnetometric geophysical survey over
the property was carried out recently by Guyanor as part of a survey of all of
Guyanor's French Guiana properties.
Surface sampling from approximately 900 outcrop channel samples has
indicated a zone in excess of two kilometers in length with widths varying
between 100 and 400 meters and average gold grades of 1.5 to 2.0 g Au/t, and as
high as 13 g Au/t. In June 1996, Guyanor initiated drilling on the Paul-Isnard
project area and has completed 18 holes totaling 3,300 meters on the Montagne
d'Or zone on the north flank of Decou-Decou Mountain, part of an initial 6,000
meter drilling program. The objective of the drilling campaign is to test the
depth continuity of mineralization identified through surface sampling. Once
assays are received, Guyanor plans to compile and interpret the data from the
first 18 holes prior to planning the completion of the 6,000 meter campaign,
the success of which will determine further drilling programs.
27
<PAGE>
DACHINE, FRENCH GUIANA
The Dachine project, owned through Guyanor, covers a 2,500 hectare area in
southwest French Guiana approximately 200 kilometers southwest of Cayenne that
was previously known as the Inini diamond occurrence. As of December 31, 1995,
a total of $0.8 million, including capitalized acquisition costs, has been
spent at Dachine since the Company's involvement with the project, of which
$0.4 million was funded by BHP. The Company anticipates that $1.1 million will
be spent on the Dachine project in 1996, all of which is expected to be funded
by BHP.
In December 1995, Guyanor entered into an agreement with BHP pursuant to
which BHP would earn a 51% interest in the Dachine project by spending $3.5
million by May 31, 1998. Depending upon options available to both companies,
Guyanor's ultimate interest in the property could vary between 31.5% and 49%.
BHP may elect to terminate the agreement and stop funding the Dachine project
at any time.
On March 1, 1996, the Company and Guyanor reported the discovery within
the Dachine permit area of a metamorphosed ultramafic structure that can be
traced over a minimum dimension of approximately 3.5 kilometers in length and
0.5 kilometers in width. Final results from the initial exploration program,
announced on May 22, 1996, exhibited significant diamond counts from
microdiamond analysis on auger and core drill holes that intersected the main
body with a total of 8,970 stones recovered from approximately 1,164 kilograms
of core and auger samples. Additionally, a total of 976 stones were recovered
from microdiamond analysis on approximately 387 kilograms of outcrop and soil
samples collected during the initial exploration program.
These results led to the decision to proceed with an initial small bulk
sample at Dachine during second half of 1996. This program calls for the
collection of 200 to 250 tonnes of material from several near surface pits
along the length of the Dachine body. This material will be processed at the
Dachine site to produce a heavy mineral concentrate which will be shipped to
North America for macrodiamond analysis. Results of this initial bulk sample
will serve as the basis for future exploration programs at Dachine. To secure
its land position, Guyanor has applied for a 33,700 hectare "A" Permit around
the existing Dachine "B" Permit area.
DUL MOUNTAIN, ETHIOPIA
The Company believes it was the first foreign company to be awarded
exploration licenses in Ethiopia. Golden Star has acquired an interest in 90
exclusive exploration licenses to explore for gold at the Dul Mountain project
located in western Ethiopia, approximately 500 kilometers west-northwest of
Addis Ababa, Ethiopia. As of December 31, 1995, a total of $2.6 million,
including capitalized acquisition costs, had been spent at Dul Mountain since
the Company's involvement with the project. The Company anticipates that
$1.8 million will be spent on the Dul Mountain project in 1996. The Company
has transferred its interest in the Dul Mountain project to PARC, subject to
governmental approval.
The area covered by the Dul Mountain project lies within the western
Ethiopian Shield which is part of the north-south trending Pan-African-
Mozambique Precambrian belt that extends along the east coast of Africa. There
are records of small-scale alluvial gold production on the Dul Mountain
property for most of this century, with unrecorded production by local miners
continuing today. Previous exploration has identified three gold prospects on
the property: Ashashire, Azale-Akendeyu and Dul Mountain. The Company has
ceased activity on the latter prospect.
28
<PAGE>
Trenching at the Ashashire prospect over an anomaly 1.6 kilometers in
length and 200 meters in width provided encouragement with mineralized sections
of 4.1 g Au/t over 24.6 meters and 3.3 g Au/t over 14.8 meters. Ashasire and a
second target, Belaute, are both prospects in the western half of the Dul
Mountain project area which warrant follow-up work, although difficult terrain
makes mobilization costly.
In late 1995, the reconnaissance work over the eastern half of the Dul
Mountain project area resulted in the discovery of the previously unknown
Menghi area on the northern portion of the most eastern of three greenstone
belts on the project. The main zone of interest on the 4 by 5 kilometer Menghi
prospect is a north striking quartz ridge approximately 600 meters long.
During the first half of 1996, PARC moved its primary camp at Dul Mountain to a
location near the Menghi prospect and conducted soil geochemical and ground
geophysical surveys as well as trenching. Trenching completed to date over a
strike length of approximately 400 meters along the mineralized zone
identified average widths of mineralization within the trenches of 27 meters
with a weighted average grade of 2.9 g Au/t.
In July 1996, an initial seven hole, 1,100 meter core drilling campaign
was initiated in the south of the zone identified by trenching to test the
depth continuity of mineralization along strike to the north. Poor drilling
conditions early in the program and heavy rains slowed the drilling as well as
additional trenching to the south testing for possible extensions of the
system. PARC plans to compile and interpret the results from the initial
drilling campaign and additional trenching data prior to recommencing drilling
at the Menghi prospect.
PARC has not complied with certain of the terms of its license agreement
with the Ethiopian government in which PARC agreed to a specified work program
and a certain level of expenditures at the Dul Mountain project. PARC and the
government have agreed to a revised work program and lower required
expenditures for the Dul Mountain project and PARC intends to use its best
efforts to resolve any additional outstanding issues with respect to the
license agreement. Although the Company currently has no reason to believe
that its licenses for the Dul Mountain project will be revoked, there can be no
assurance that the Ethiopian government will not revoke the licenses as a
result of noncompliance with certain of the original terms of the license
agreement, as discussed above.
DIOULAFOUNDOU, MALI
The Company's exploration activity in Mali to date has concentrated on the
Dioulafoundou project near the Mali-Senegal border in the Kenieba district,
approximately 400 kilometers west of the capital of Bamako. The project
consists of four authorizations aggregating 2,800 hectares. As of
December 31, 1995, a total of $1.9 million, including capitalized acquisition
costs, had been spent at Dioulafoundou since the Company's involvement with the
project. The Company anticipates that $0.8 million will be spent on the
Dioulafoundou project in 1996.
The Company, through PARC, has an 85% interest on one authorization,
subject to divestment, while the other three authorizations have been
acquired, subject to divestment, from Mali parties who retain the right to a
5% participating interest and a royalty of 0.3% from any mine development.
The region in which the Dioulafoundou project lies is part of the West
African Shield. The project area lies within the exposed early Proterozoic
Kenieba inlier that straddles the Mali-Senegal border and is composed primarily
of thick Birimian volcanic and sedimentary formations that trend
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generally north-south and northeast-southwest. Local miners have long
produced unknown quantities of gold from alluvial deposits in the Kenieba
district.
The main objective of PARC's work completed to date at the Dioulafoundou
project has been to establish the presence of economically attractive gold
mineralization within the prospect area. During 1995, PARC completed an
initial 1,137 meter core drilling campaign, encountering significant
mineralization in six of eight holes. Mineralized intersections from the
initial core drilling campaign in 1995 averaged 11 to 15 meters at 2.5 to 3.0 g
Au/t.
During the first half of 1996, PARC completed a mechanical augering
program for geochemical analysis consisting of 355 holes totaling 4,548 meters
over the whole of the Dioulafoundou project. A 65 hole, 4,200 meter reverse
circulation ("RC") drilling program was completed in July, 1996. This RC
program confirmed the north-south striking mineralization identified by
previous core drilling with near surface mineralized intersections with an
average width of 2.9 meters and a weighted average grade of 2.4 g Au/t. Gold
mineralization also was encountered on the Bah permit which comprises the south
and southeast border of the Diaoulafoundou project. These mineralized zones
are characterized as near surface, narrow zones with gold grades ranging from
1.3 to 3.2 g Au/t. An early and intense rainy season caused postponement of RC
drilling near the extensive Kerekou artisanal working on the Magassa permit.
PARC intends to continue evaluating the entire Diaoulafoundou project.
PARC expects to resume core drilling during the fourth quarter of 1996 to test
extension of the mineralized zone on the AFC permit, core drilling the more
significant mineralized zones on the Bah permit and, as previously planned,
test targets near the Kerekou workings on the Magassa permit.
PARC's exploration activities at the Diaoulafoundou project are partly
conducted under an exploitation authorization issued by the government of Mali
which requires the authorization holder to conduct exploitation activities
within the authorization area. Although PARC intends to commence exploitation
activities within the perimeter of the authorization if warranted, there can be
no assurance that it will do so or that, even if such activities are commenced,
PARC's exploitation authorization for the Diaoulafoundou project will not be
revoked because of its failure to comply with the requirement to conduct
exploitation activities. The Company currently has no reason to believe that
its exploitation authorization for the Diaoulafoundou project will be revoked.
OTHER PROPERTIES
Golden Star and its subsidiaries also hold a significant portfolio of
other early and intermediate stage gold and diamond projects in Guyana, French
Guiana, Suriname, Brazil and Bolivia in South America and Eritrea, Ethiopia,
Gabon, Ivory Coast and Mali in Africa that are in various stages of
development. Excluding the properties specifically mentioned above, the
Company anticipates spending $14.9 million on these other projects in 1996, of
which $1.9 million is anticipated to be funded by various partners and through
the recovery of performance bonds.
In addition to the advanced exploration projects described above, Golden
Star intends to initiate core drilling at Antino, which is part of the South
Benzdorp project in southeast Suriname, late in the third quarter of 1996 and
core drilling on the Fish Creek project in northwest Guyana during the fourth
quarter of 1996. PARC intends to commence and complete initial core drilling
campaigns at the Adi Rassi and Torat prospects in Eritrea throughout the
remainder of the year.
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In 1994, the Company established a diamond exploration group based in
Georgetown, Guyana to evaluate the potential for primary diamond sources on
exploration reconnaissance areas in Guyana, as well as to identify other high
priority diamond exploration prospects across the Guiana Shield. This work has
led to the identification of multiple diamond exploration projects in Guyana,
Suriname and French Guiana. In 1996, the Company made the decision to proceed
with the next level of evaluation on these targets, as well as on new potential
targets which have been identified on permits held by PARC in Ivory Coast. The
Company intends to continue its diamond exploration efforts by committing up to
$2.5 million of its annual exploration budget to the advancement of existing
and any future diamond exploration projects.
The Company acquires and disposes of mineral exploration properties in the
ordinary course of its business and intends to make selective additional
acquisitions of promising properties in South America, Africa and other parts
of the world.
DESCRIPTION OF SHARE CAPITAL
The Company's Articles currently authorize the issuance of an unlimited
number of Common Shares and an unlimited number of Preferred Shares, issuable
in series. As of June 30, 1996, 25,716,303 Common Shares and no Preferred
Shares were outstanding.
COMMON SHARES
The holders of Commons Shares are entitled to receive dividends as, when
and if declared by the Board of Directors of the Company out of funds legally
available therefor, provided that if any Preferred Shares are at the time
outstanding, the payment of dividends on Common Shares or other distributions
(including purchases of Common Shares) will be subject to any preferential
rights attaching to any other class or series of shares of the Company
The holders of Common Shares are entitled to one vote for each share on
all matters voted on by shareholders, including elections of directors. The
holders of Common Shares do not have any conversion, redemption or preemptive
rights. In the event of the dissolution, liquidation or winding up of the
Company, holders of Common Shares are entitled to share ratably in any assets
remaining after the satisfaction in full of the prior rights of creditors,
including holders of the Company's indebtedness, and the aggregate liquidation
preference of any other class or series of shares then outstanding.
On June 11, 1996, the shareholders of the Company confirmed the adoption
of a Shareholder Rights Plan (the "Rights Plan"). Pursuant to the Rights Plan,
the Company issued one right (a "Right") for each Common Share outstanding on
April 24, 1996 and will issue one Right for each Common Share issued in the
future. The terms of the Rights Plan are set forth in the Rights Agreement
(the "Rights Agreement") dated as of April 24, 1996 between the Company and The
R-M Trust Company as Rights Agent. For additional information on the Rights
Plan and the Rights Agreement, see the Company's Current Report on Form 8-K
filed with the Commission on May 8, 1996, incorporated by reference herein.
Any material United States or Canadian federal income tax consequences
with respect to any offered Common Shares will be described in the Prospectus
Supplement relating to the offering and sale of such Common Shares.
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All outstanding Common Shares are, and the Common Shares offered hereby
will be, issued as fully paid and non-assessable.
The registrar and transfer agent for the Common Shares is The R-M Trust
Company. ChaseMellon Shareholder Services, L.L.C. acts as co-registrar and co-
transfer agent for the Common Shares in the United States.
PREFERRED SHARES
The following is a description of certain general terms and provisions of
the Preferred Shares. The particular terms of any series of Preferred Shares
will be described in the applicable Prospectus Supplement. If so indicated in
a Prospectus Supplement, the terms of any such series may differ from the terms
set forth below.
The summary of the terms of the Company's Preferred Shares contained in
this Prospectus does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Company's Articles relating
to each series of Preferred Shares, which will be filed as an exhibit to or
incorporated by reference in this Prospectus at or prior to the time of
issuance of any such series of the Preferred Shares.
The Board of Directors of the Company is authorized to approve the
issuance of one or more series of Preferred Shares without further
authorization of the shareholders of the Company and to fix the number of
shares, the designations, rights, privileges, restrictions and conditions of
any such series.
The applicable Prospectus Supplement will set forth the number of shares,
particular designation, relative rights and preferences and the limitations of
any series of Preferred Shares in respect of which this Prospectus is
delivered. The particular terms of any such series will include the following:
(i) The maximum number of shares to constitute the series and the
designation thereof;
(ii) The annual dividend rate, if any, on shares of the series, whether
such rate is fixed or variable or both, the date or dates from which dividends
will begin to accrue or accumulate, whether dividends will be cumulative and
whether such dividends shall be paid in cash, Common Shares or otherwise;
(iii) Whether the shares of the series will be redeemable and, if so, the
price at and the terms and conditions on which the shares of the series may be
redeemed, including the time during which shares of the series may be redeemed
and any accumulated dividends thereon that the holders of shares of the series
shall be entitled to receive upon the redemption thereof;
(iv) The liquidation preference, if any, applicable to shares of the
series;
(v) Whether the shares of the series will be subject to operation of a
retirement or sinking fund and, if so, the extent and manner in which any such
fund shall be applied to the purchase or redemption of the shares of the series
for retirement or for other corporate purposes, and the terms and provisions
relating to the operation of such fund;
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(vi) The terms and conditions, if any, on which the shares of the series
shall be convertible into, or exchangeable for, shares of any other class or
classes of capital stock of the Company or any series of any other class or
classes, or of any other series of the same class, including the price or
prices or the rate or rates of conversion or exchange and the method, if any,
of adjusting the same;
(vii) The voting rights, if any, of the shares of the series;
(viii) The currency or units based on or relating to currencies in which
such series is denominated and/or in which payments will or may be payable;
(ix) The methods by which amounts payable in respect of such series may
be calculated and any commodities, currencies or indices, or price, rate or
value, relevant to such calculation;
(x) Any listing of the shares of the series on a securities exchange; and
(xi) Any other preferences and relative, participating, optional or other
rights or qualifications, limitations or restrictions thereof.
Any material United States or Canadian federal income tax consequences and
other special considerations with respect to any offered Preferred Shares will
be described in the Prospectus Supplement relating to the offering and sale of
such Preferred Shares.
DESCRIPTION OF WARRANTS
The Company may issue Warrants to purchase Common Shares, Preferred Shares
or Convertible Debt Securities. Warrants may be issued, subject to regulatory
approvals, independently or together with any Common Shares, Preferred Shares
or Convertible Debt Securities, as the case may be and may be attached to or
separate from such Common Shares, Preferred Shares or Convertible Debt
Securities. Each series of Warrants will be issued under a separate warrant
agreement (each, a "Warrant Agreement") to be entered into between the Company
and a warrant agent (each, a "Warrant Agent"). The Warrant Agent will act
solely as an agent of the Company in connection with the Warrants of such
series and will not assume any obligation or relationship of agency or trust
for or with any holders or beneficial owners of Warrants. The following sets
forth certain general terms and provisions of the Warrants offered hereby.
Further terms of the Warrants and the applicable Warrant Agreement will be set
forth in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the following terms of
any Warrants in respect of which this Prospectus is being delivered; (1) the
title of such Warrants; (2) the securities (which may include Common Shares,
Preferred Shares or Convertible Debt Securities) for which such Warrants are
exercisable; (3) the price or prices at which such Warrants will be issued; (4)
the periods during which the Warrants are exercisable; (5) the number of Common
Shares, Preferred Shares or amount of Convertible Debt Securities for which
each Warrant is exercisable; (6) the exercise price for such Warrants,
including any changes to or adjustments in the exercise price; (7) the currency
or currencies, including composite currencies, in which the exercise price of
such Warrants may be payable; (8) if applicable, the designation and terms of
the Preferred Shares with which such Warrants are issued; (9) if applicable,
the terms of the Convertible Debt Securities with which such Warrants are
issued; (10) the number of Warrants issued with each Common Share or Preferred
Share or the Convertible Debt Securities; (11), if applicable, the date on and
after which
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such Warrants and the related Common Shares, Preferred Shares or
Convertible Debt Securities will be separately transferable; (12) any listing
of the Warrants on a securities exchange; (13) if applicable, a discussion of
material United States or Canadian federal income tax consequences and other
special considerations with respect to any Warrants; and (14) any other terms
of such Warrants, including terms, procedures and limitations relating to the
exchange and exercise of such Warrants.
DESCRIPTION OF CONVERTIBLE DEBT SECURITIES
The Convertible Debt Securities may be issued from time to time in one or
more series under an indenture among the Company, as issuer, and the trustee
specified in the applicable Prospectus Supplement. The following statements
with respect to the Convertible Debt Securities are subject to the detailed
provisions of the indenture, the form of which is filed as an exhibit to the
Registration Statement. Parenthetical references below are to the indenture
(or the form of security contained therein if so specified) and, whenever any
particular provision of the indenture or any term used therein is referred to,
such provision or term is incorporated by reference as a part of the statement
in connection with which such reference is made, and the statement in
connection with which such reference is made is qualified in its entirety by
such reference.
The Convertible Debt Securities will constitute either indebtedness
designated as Senior Indebtedness ("Senior Debt Securities"), indebtedness
designated as Senior Subordinated Indebtedness ("Senior Subordinated Debt
Securities") or indebtedness designated as Subordinated Indebtedness
("Subordinated Debt Securities"). Senior Debt Securities, Senior Subordinated
Debt Securities and Subordinated Debt Securities will each be issued under a
separate indenture (individually an "Indenture" and collectively the
"Indentures") to be entered into prior to the issuance of such Convertible Debt
Securities. The Indentures will be substantially identical, except for
provisions relating to subordination. See "Subordination of Senior
Subordinated Debt Securities and Subordinated Debt Securities". There will be
a separate Trustee (individually a "Trustee" and collectively the "Trustees")
under each Indenture. Information regarding the Trustee under an Indenture
will be included in any Prospectus Supplement relating to the Convertible Debt
Securities issued thereunder.
The particular terms of each series of Convertible Debt Securities, as
well as any modification or addition to the general terms of the Convertible
Debt Securities as herein described, which may be applicable to a particular
series of Convertible Debt Securities, are described in the Prospectus
Supplement relating to such series of Convertible Debt Securities and will be
set forth in a filing with the Commission. Accordingly, for a description of
the terms of a particular series of Convertible Debt Securities, reference must
be made to both the Prospectus Supplement relating to such series and to the
description of Convertible Debt Securities set forth in this Prospectus.
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GENERAL
The Convertible Debt Securities offered pursuant to this Prospectus will
be limited to $75,000,000 aggregate principal amount (or (i) its equivalent
(based on the applicable exchange rate at the time of sale), if Convertible
Debt Securities are issued with principal amounts denominated in one or more
foreign currencies, composite currencies or currency units as shall be
designated by the Company, or (ii) such greater amount, if Convertible Debt
Securities are issued at an original issue discount, as shall result in
aggregate proceeds of $75,000,000 to the Company). The Indenture provides that
additional convertible debt securities may be issued thereunder up to the
aggregate principal amount, which is not limited by the Indenture, authorized
from time to time by the Company's Board of Directors or any duly authorized
committee thereof. So long as a single Trustee is acting for the benefit of
the holders of all the Convertible Debt Securities offered hereby and any such
additional convertible debt securities issued under the Indenture, the
Convertible Debt Securities and any such additional convertible debt securities
are herein collectively referred to as the "Indenture Securities." The
Indenture also provides that there may be more than one Trustee under the
Indenture, each with respect to one or more different series of Indenture
Securities. At any time when two or more Trustees are acting, each with
respect to only certain series, the term "Indenture Securities" as used herein
shall mean the one or more series with respect to which each respective Trustee
is acting and the powers and the trust obligations of each such Trustee as
described herein shall extend only to the one or more series of Indenture
Securities for which it is acting as trustee. The effect of the provisions
contemplating that there might be more than one Trustee acting for different
series of Indenture Securities is that, in that event, those Indenture
Securities (whether of one or more than one series) for which each Trustee is
acting would be treated as if issued under a separate Indenture.
The applicable Prospectus Supplement will set forth a description of the
particular series of Convertible Debt Securities being offered thereby,
including but not limited to: (1) the designation or title of such Convertible
Debt Securities; (2) the aggregate principal amount of such Convertible Debt
Securities; (3) the percentage of their principal amount at which such
Convertible Debt Securities will be offered; (4) the date or dates on which the
principal of such Convertible Debt Securities will be payable and on which such
Convertible Debt Securities will mature; (5) the rate or rates (which may be
fixed or variable) at which such Convertible Debt Securities shall bear
interest, or the method of determination of such rate or rates at which such
Convertible Debt Securities shall bear interest, if any; (6) the date or dates
from which interest will accrue or the method of determination of such date or
dates, and the date or dates on which any such interest shall be payable;
(7) the currencies or currency units in which such Convertible Debt Securities
are issued or payable; (8) the terms for redemption, extension or early
repayment of such Convertible Debt Securities, if any; (9) if other than
denominations of $1,000 and any integral multiple thereof, the denominations in
which such Convertible Debt Securities are authorized to be issued; (10) the
terms and conditions upon which conversion will be effected, including the
conversion price, the conversion period and other conversion provisions;
(11) the provisions for a sinking fund, if any; (12) whether such Convertible
Debt Securities are issuable as a Global Security or Securities; (13) any index
or formula to be used to determine the amount of payments of principal,
premium, if any, and interest on such Convertible Debt Securities, and any
commodities, currencies, currency units or indices, or value, rate or price,
relevant to such determination; (14) if the principal of, premium, if any, or
interest on such Convertible Debt Securities is to be payable, at the election
of the Company or a Holder thereof, in one or more currencies or currency units
other than that or those in which such Convertible Debt Securities are stated
to be payable, the currencies or currency units in which payment of the
principal of, premium, if any, and interest on such Convertible Debt
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Securities
as to which election is made shall be payable, and the periods within which and
the terms and conditions upon which such election is to be made; (15) if other
than the principal amount thereof, the portion of the principal amount of such
Convertible Debt Securities of the series which will be payable upon
acceleration of the Maturity thereof; (16) whether such Convertible Debt
Securities are subordinate in right of payment to any Senior Indebtedness of
the Company and, if so, the terms and conditions of such subordination and the
aggregate principal amount of such Senior Indebtedness outstanding as of a
recent date; (17) any covenants to which the Company may be subject with
respect to such Convertible Debt Securities; (18) the applicability of the
provisions described under "Defeasance" below; (19) United States and Canadian
Federal income tax consequences, if any; (20) the provisions for the payment of
additional amounts with respect to any Canadian withholding taxes in certain
cases; (21) any term or provision relating to such Convertible Debt Securities
which is not inconsistent with the provisions of the Indenture; (22) the
Trustee; and (23) any other special terms pertaining to such Convertible Debt
Securities. Unless otherwise specified in the applicable Prospectus
Supplement, the Convertible Debt Securities will not be listed on any
securities exchange.
One or more series of Convertible Debt Securities may be sold at a
substantial discount below their stated principal amount, bearing no interest
or interest at a rate which at the time of issuance is below market rates. Any
material United States or Canadian federal income tax consequences and other
special considerations with respect to any series of Convertible Debt
Securities will be described in the Prospectus Supplement relating to any such
series of Convertible Debt Securities.
If the purchase price of any series of Convertible Debt Securities is
denominated in a foreign currency or currencies or a foreign currency unit or
units or if the principal of, premium, if any, and interest on any series of
Convertible Debt Securities are payable in a foreign currency or currencies or
a foreign currency unit or units, the restrictions, elections, general tax
considerations, specific terms and other information with respect to such
series of Convertible Debt Securities will be set forth in the applicable
Prospectus Supplement.
Convertible Debt Securities may be issued from time to time with payment
terms which are calculated by reference to the value, rate or price of one or
more commodities, currencies, currency units or indices. Holders of such
Convertible Debt Securities may receive a principal amount (including premium,
if any) on any principal payment date, or a payment of interest on any interest
payment date, that is greater than or less than the amount of principal
(including premium, if any) or interest otherwise payable on such dates,
depending upon the value, rate or price on the applicable dates of the
applicable currency, currency unit, commodity or index. Information as to the
methods for determining the amount of principal, premium, if any, or interest
payable on any date, the currencies, currency units, commodities or indices to
which the amount payable on such date is linked and any additional tax
considerations will be set forth in the applicable Prospectus Supplement.
Except as may be set forth in the applicable Prospectus Supplement,
Holders of Convertible Debt Securities will not have the benefit of any
specific covenants or provisions in the applicable Indenture or such
Convertible Debt Securities in the event that the Company engages in or becomes
the subject of a highly leveraged transaction, other than the limitations on
mergers, consolidations and transfers of substantially all of the Company's
properties and assets as an entirety to any person as described below under
"Consolidation, Merger and Sale of Assets".
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The Convertible Debt Securities will be general unsecured obligations of
the Company.
Except as otherwise provided in the applicable Prospectus Supplement,
principal, premium, if any, and interest, if any, will be payable at an office
or agency to be maintained by the Company in ________________________, except
that at the option of the Company interest may be paid by check mailed to the
person entitled thereto.
The Convertible Debt Securities will be issued only in fully registered
form without coupons and may be presented for the registration of transfer or
exchange at the corporate trust office of the Trustee. No service charge will
be made for any transfer or exchange of the Convertible Debt Securities, but
the Company may require payment of a sum to cover any tax or other governmental
charge payable in connection therewith. Not all Convertible Debt Securities of
any one series need be issued at the same time, and, unless otherwise provided,
a series may be reopened for issuances of additional Convertible Debt
Securities of such series.
SENIOR DEBT SECURITIES
The Senior Debt Securities will rank PARI PASSU with all other unsecured
and unsubordinated debt of the Company and senior to the Senior Subordinated
Debt Securities and Subordinated Debt Securities.
SUBORDINATION OF SENIOR SUBORDINATED DEBT SECURITIES AND SUBORDINATED DEBT
SECURITIES
The payment of the principal of, premium, if any, and interest on the
Senior Subordinated Debt Securities and the Subordinated Debt Securities will,
to the extent set forth in the respective Indentures governing such Senior
Subordinated Debt Securities and Subordinated Debt Securities, be subordinated
in right of payment to the prior payment in full of all Senior Indebtedness.
Upon any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of the Company, the holders of all Senior Indebtedness will be
entitled to receive payment in full of all amounts due or to become due thereon
before the Holders of the Senior Subordinated Debt Securities or the
Subordinated Debt Securities will be entitled to receive any payment in respect
of the principal of, premium, if any, or interest on such Senior Subordinated
Debt Securities or Subordinated Debt Securities, as the case may be. In the
event of the acceleration of the maturity of any Senior Subordinated Debt
Securities or Subordinated Debt Securities, the holders of all Senior
Indebtedness will be entitled to receive payment in full of all amounts due or
to become due thereon before the Holders of the Senior Subordinated Debt
Securities or Subordinated Debt Securities, as the case may be, will be
entitled to receive any payment upon the principal of, premium, if any, or
interest on such Senior Subordinated Debt Securities or Subordinated Debt
Securities, as the case may be. No payments on account of principal, premium,
if any, or interest in respect of the Senior Subordinated Debt Securities or
Subordinated Debt Securities may be made if there shall have occurred and be
continuing in a default in the payment of principal of (or premium, if any) or
interest on any Senior Indebtedness beyond any applicable grace period, or a
default with respect to any Senior Indebtedness permitting the holders thereof
to accelerate the maturity thereof, or if any judicial proceedings shall be
pending with respect to any such default. For purposes of the subordination
provisions, the payment, issuance or delivery of cash, property or securities
(other than stock, and certain subordinated securities, of the Company) upon
conversion or exchange or a Senior Subordinated Debt Security or Subordinated
Debt Security
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will be deemed to constitute payment on account of the principal
of such Senior Subordinated Debt Security or Subordinated Debt Security, as the
case may be.
By reason of such provisions, in the event of insolvency, holders of
Senior Subordinated Debt Securities and Subordinated Debt Securities may
recover less, ratably, than holders of Senior Indebtedness with respect
thereto.
The term "Senior Indebtedness", when used with respect to any series of
Senior Subordinated Debt Securities or Subordinated Debt Securities, is defined
to include all amounts due on and obligations in connection with any of the
following, whether outstanding at the date of execution of the Indenture or
thereafter incurred, assumed, guaranteed or otherwise created (including,
without limitation, interest accruing on or after a bankruptcy or other similar
event, whether or not an allowed claim therein):
(a) indebtedness, obligations and other liabilities (contingent or
otherwise) of the Company for money borrowed or evidenced by bonds,
debentures, notes or similar instruments;
(b) reimbursement obligations and other liabilities (contingent or
otherwise) of the Company with respect to letters of credit or
bankers' acceptances issued for the account of the Company and
interest rate protection agreements and currency exchange or
purchase agreements;
(c) obligations and liabilities (contingent or otherwise) of the Company
related to capitalized lease obligations;
(d) indebtedness, obligations and other liabilities (contingent or
otherwise) of the Company related to agreements or arrangements
designed to protect the Company against fluctuations in commodity
prices, including without limitation, commodity futures contracts or
similar hedging instruments;
(e) indebtedness of others of the kinds described in the preceding
clauses (a) through (d) that the Company has assumed, guaranteed or
otherwise assured the payment of, directly or indirectly;
(f) indebtedness of another Person of the type described in the
preceding clauses (a) through (e) secured by any mortgage, pledge,
lien or other encumbrance on property owned or held by the Company;
and
(g) deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or
liability described in the preceding clauses (a) through (f) whether
or not there is any notice to or consent of the Holders of such
series of Senior Subordinated Debt Securities or Subordinated Debt
Securities, as the case may be;
except that, with respect to the Senior Subordinated Debt Securities, any
particular indebtedness, obligation, liability, guaranty, assumption, deferral,
renewal, extension or refunding shall not constitute "Senior Indebtedness" if
it is expressly stated in the governing terms, or in the assumption or
guarantee, thereof that the indebtedness involved is not senior in right of
payment to the Senior
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Subordinated Debt Securities or that such indebtedness is
PARI PASSU with or junior to the Senior Subordinated Debt Securities and, with
respect to Subordinated Debt Securities, any particular indebtedness,
obligation, liability, guaranty, assumption, deferral, renewal, extension or
refunding shall not constitute "Senior Indebtedness" if it is expressly stated
in the governing terms, or in the assumption or guarantee, thereof that the
indebtedness involved is not senior in right of payment to the Subordinated
Debt Securities or that such indebtedness is PARI PASSU with or junior to the
Subordinated Debt Securities.
In certain circumstances, such as the bankruptcy or insolvency of the
Company, Canadian or U.S. bankruptcy or insolvency legislation may be
applicable and the application of such legislation may lead to different
results with respect to, for example, payments to be made to Holders of
Convertible Debt Securities, or priorities between Holders of the Convertible
Debt Securities and holders of Senior Indebtedness, than those provided for in
the applicable Indenture.
If this Prospectus is being delivered in connection with a series of
Senior Subordinated Debt Securities or Subordinated Debt Securities, the
accompanying Prospectus Supplement or the information incorporated herein by
reference will set forth the approximate amount of Senior Indebtedness
outstanding as of the end of the Company's most recent fiscal quarter.
FORM, EXCHANGE, REGISTRATION, CONVERSION, TRANSFER AND PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement, the
Convertible Debt Securities will be issued only in fully registered form in
denominations of U.S. $1,000 or integral multiples thereof. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of principal,
premium, if any, and interest on the Convertible Debt Securities will be
payable, and the exchange, conversion and transfer of Convertible Debt
Securities will be registerable, at the office or agency of the Company
maintained for such purposes. No service charge will be made for any
registration of a transfer or exchange of the Convertible Debt Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
All monies paid by the Company to a Paying Agent for the payment of
principal of, premium, if any, or interest on any Convertible Debt Security
which remain unclaimed for two years after such principal, premium or interest
has become due and payable may be repaid to the Company and thereafter the
holder of such Convertible Debt Security may look only to the Company for
payment thereof.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture with respect
to Convertible Debt Securities of any series: (a) failure to pay principal (or
premium, if any) on any Convertible Debt Security of that series when due,
whether or not such failure is a result of the subordination provisions of the
Indenture with respect to such series; (b) failure to pay any interest on any
Convertible Debt Security of that series when due, continued for 30 days,
whether or not such failure is a result of the subordination provisions of the
Indenture with respect to such series; (c) failure to make any sinking fund
payment, when due, in respect of any Convertible Debt Security of that series;
(d) failure to perform any other covenant of the Company in the applicable
Indenture or any other covenant to which the Company may be subject with
respect to Convertible Debt Securities of that
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<PAGE>
series (other than a covenant
solely for the benefit of a series of Convertible Debt Securities other than
that series), continued for 90 days after written notice as provided in the
applicable Indenture; (e) failure to pay when due on final maturity (after the
expiration of any applicable grace period), or upon acceleration, any
indebtedness for money borrowed by the Company in excess of U.S. $10 million;
(f) certain events of bankruptcy, insolvency or reorganization; and (g) any
other Event of Default provided with respect to Convertible Debt Securities of
that series.
If an Event of Default with respect to outstanding Convertible Debt
Securities of any series shall occur and be continuing, either the Trustee or
the Holders of at least 25% in principal amount of the outstanding Convertible
Debt Securities of that series, by notice as provided in the applicable
Indenture, may declare the principal amount (or, if the Convertible Debt
Securities of that series are original issue discount securities, such portion
of the principal amount as may be specified in the terms of that series) of all
Convertible Debt Securities of that series to be due and payable immediately,
except that upon the occurrence of an Event of Default specified in (f) above,
the principal amount (or in the case of original issue discount securities,
such portion) of all Convertible Debt Securities shall be immediately due and
payable without notice. However, at any time after a declaration of
acceleration with respect to Convertible Debt Securities of any series has been
made, but before judgment or decree based on such acceleration has been
obtained, the Holders of a majority in principal amount of the outstanding
Convertible Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration. For information as to waiver of defaults,
see "Modification and Waiver" below.
The Indentures will provide that, subject to the duty of the respective
Trustees thereunder during an Event of Default to act with the required
standard of care, each such Trustee will be under no obligation to exercise any
of its rights or powers under the respective Indentures at the request or
direction of any of the Holders, unless such Holders shall have offered to such
Trustee reasonable security or indemnity. Subject to certain provisions,
including those requiring security or indemnification of the applicable
Trustee, the Holders of a majority in principal amount of the outstanding
Convertible Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
such Trustee, or exercising any trust or power conferred on such Trustee, with
respect to the Convertible Debt Securities of that series.
No Holder of a Convertible Debt Security of any series will have any right
to institute any proceeding with respect to the applicable Indenture or for any
remedy thereunder, unless such Holder shall have previously given to the
applicable Trustee written notice of a continuing Event of Default and unless
also the Holders of at least 25% in aggregate principal amount of the
outstanding Convertible Debt Securities of the same series shall have written
requests, and offered reasonable indemnity, to such Trustee to institute such
proceeding as trustee, and the Trustee shall not have received from the Holders
of a majority in aggregate principal amount of the outstanding Convertible Debt
Securities of the same series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. However, such
limitations do not apply to a suit instituted by a Holder of a Convertible Debt
Security for enforcement of payment of the principal of and interest on such
Convertible Debt Security on or after the respective due dates expressed in
such Convertible Debt Security.
The Company will be required to furnish to the Trustees annually a
statement as to the performance by the Company of its obligations under the
respective Indentures and as to any default in such performance.
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<PAGE>
MODIFICATION AND WAIVER
Without the consent of any Holder of outstanding Convertible Debt
Securities, the Company and the Trustees may amend or supplement the Indentures
or the Convertible Debt Securities to cure any ambiguity, defect or
inconsistency, or to make any change that does not adversely affect the rights
of any Holder of Convertible Debt Securities. Other modifications and
amendments of the respective Indentures may be made by the Company and the
applicable Trustee with the consent of the Holders of not less than a majority
in aggregate principal amount of the outstanding Convertible Debt Securities of
each series affected thereby; provided, however, that no such modification or
amendment may, without the consent of the Holder of each outstanding
Convertible Debt Security affected thereby: (a) change the stated maturity of
the principal of, or any installment of principal of, or premium, if any, or
interest on any Convertible Debt Security; (b) reduce the principal amount of,
the rate of interest on, or the premium, if any, payable upon the redemption
of, any Convertible Debt Security; (c) reduce the amount of principal of an
original issue discount security payable upon acceleration of the maturity
thereof; (d) change the place or currency of payment of principal of, premium,
if any, or interest on any Convertible Debt Security; (e) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Convertible Debt Security on or after the stated maturity or redemption date
thereof; (f) modify the applicable conversion provisions in a manner adverse to
the holders thereof; (g) modify the subordination provisions applicable to
Senior Subordinated Debt Securities or Subordinated Debt Securities in a manner
adverse to the Holders thereof; (h) reduce the percentage in principal amount
of outstanding Convertible Debt Securities of any series, the consent of the
Holders of which is required for modification or amendment of the applicable
Indenture or for waiver of compliance with certain provisions of the applicable
Indenture or for waiver of certain defaults or (i) modify any of the provisions
of certain sections as specified in the Indenture including the provisions
summarized in this paragraph, except to increase any such percentage or to
designate additional provisions of the Indenture, which, with respect to such
series, cannot be modified or waived without the consent of the Holder of each
outstanding Convertible Debt Security affected thereby.
The Holders of at least a majority in principal amount of the outstanding
Convertible Debt Securities of any series may on behalf of the Holders of all
Convertible Debt Securities of that series waive, insofar as that series is
concerned, compliance by the Company with certain covenants of the applicable
Indenture. The Holders of not less than a majority in principal amount of the
outstanding Convertible Debt Securities of any series may, on behalf of the
Holders of all Convertible Debt Securities of that series, waive any past
default under the applicable Indenture with respect to that series, except a
default in the payment of the principal of, premium, if any, or interest on,
any Convertible Debt Security of that series or in respect of a provision which
under the applicable Indenture cannot be modified or amended without the
consent of the Holder of each outstanding Convertible Debt Security of that
series affected.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of any Holders of any series of
outstanding Convertible Debt Securities, may consolidate with or merge into, or
transfer or lease its assets substantially as an entirety (treating the Company
and each of its Subsidiaries as a single consolidated entity) to, any
corporation, and any other corporation may consolidate with or merge into, or
transfer or lease its assets substantially as an entirety to, the Company,
provided that the corporation (if other than the Company) formed by such
consolidation or into which the Company is merged or which acquires or leases
the assets of the Company substantially as an entirety is organized and
existing under the
41
<PAGE>
laws of the United States of America or Canada or any
political subdivision of either, and assumes the Company's obligations under
each series of outstanding Convertible Debt Securities and the Indentures
applicable thereto and that the Trustee is satisfied that the transaction will
not result in the successor being required to make any deduction or withholding
on account of certain Canadian taxes from any payments in respect of the
Securities, and that, after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing, and the
delivery of an officer's certificate and an opinion of counsel with respect to
compliance with the foregoing requirements.
DEFEASANCE
If so indicated in the applicable Prospectus Supplement with respect to
the Convertible Debt Securities of a series, the Company at its option (i) will
be discharged from any and all obligations in respect of the Convertible Debt
Securities of such series (except for certain obligations to register the
transfer or exchange of Convertible Debt Securities of such series, to replace
destroyed, stolen, lost or mutilated Convertible Debt Securities of such
series, and to maintain an office or agency in respect of the Convertible Debt
Securities and hold moneys for payment in trust) or (ii) will be released from
its obligations to comply with certain covenants specified in the applicable
Prospectus Supplement with respect to the Convertible Debt Securities of such
series, and the occurrence of an event described in clause (d) under "Events of
Default" above with respect to any defeased covenants, and clauses (e) and (g)
under "Events of Default" above shall no longer be an Event of Default, if in
either case the Company irrevocably deposits with the applicable Trustee, in
trust, money, government obligations of the government issuing the currency in
which the Convertible Debt Securities of the relevant series are denominated or
a combination thereof that through the payment of interest thereon and
principal thereof in accordance with the terms will provide money in an amount
sufficient to pay all the principal of and premium, if any, and interest on the
Securities of such series on the dates such payments are due (up to the stated
maturity date, or the redemption date, as the case may be) in accordance with
the terms of such Convertible Debt Securities. Such a trust may only be
established if, among other things, (a) no Event of Default described under
"Events of Default" above or event that, after notice or lapse of time, or
both, would become an Event of Default under the applicable Indenture, shall
have occurred and be continuing on the date of such deposit, or, with regard to
an Event of Default described under clause (f) under "Events of Default" above
or an event that, after notice or lapse of time, or both, would become an Event
of Default described under such clause (f), shall have occurred and be
continuing at any time during the period ending on the 123rd day following such
date of deposit, (b) the Company shall have delivered an opinion of counsel to
the effect that the Holders of the Convertible Debt Securities will not
recognize gain or loss for United States Federal income tax purposes as a
result of such deposit or defeasance and will be subject to United States
Federal income tax in the same manner as if such defeasance had not occurred,
and (c) such defeasance or covenant defeasance will not result in the trust
being in violation of the Investment Company Act of 1940. Such opinion, in the
case of defeasance under clause (i) above, must refer to and be based upon a
ruling of the Internal Revenue Service or a change in applicable Federal income
tax law occurring after the date of the applicable Indenture. In the event the
Company omits to comply with its remaining obligations under the applicable
Indenture after a defeasance of such Indenture with respect to the Convertible
Debt Securities of any series as described under clause (ii) above and the
Convertible Debt Securities of such series are declared due and payable because
of the occurrence of any undefeased Event of Default, the amount of money and
government obligations on deposit with the applicable Trustee may be
insufficient to pay amounts due on the Convertible Debt Securities of such
series at the time of the acceleration resulting from such Event of Default.
However, the Company will remain liable in respect to such payments.
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Notwithstanding the description set forth under "Subordination of Senior
Subordinated Debt Securities and Subordinated Debt Securities" above, in the
event that the Company deposits money or government obligations in compliance
with the Indenture that governs any Senior Subordinated Debt Securities or
Subordinated Debt Securities, as the case may be, in order to defease all or
certain of its obligations with respect to the applicable series of Convertible
Debt Securities, the money or government obligations so deposited will not be
subject to the subordination provisions of the applicable Indenture and the
indebtedness evidenced by such series of Convertible Debt Securities will not
be subordinated in right of payment to the holders of applicable Senior
Indebtedness to the extent of the money or government obligations so deposited.
GOVERNING LAW
The Indentures and the Convertible Debt Securities will be governed by,
and construed in accordance with, the laws of the State of New York.
REGARDING THE TRUSTEES
The Indenture contains certain limitations on the right of each Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received
in respect of any such claim as security or otherwise. Each Trustee will be
permitted to engage in certain other transactions; however, if it acquires any
conflicting interest and there is a default under the Convertible Debt
Securities issued under the applicable Indenture, it must eliminate such
conflict or resign.
BOOK-ENTRY SYSTEM
The Convertible Debt Securities of a Series may be issued in the form of
one or more global certificates representing the Convertible Debt Securities
(the "Global Securities") that will be deposited with a depository (the
"Depository") or with a nominee for the Depository identified in the applicable
Prospectus supplement and will be registered in the name of the Depository or a
nominee thereof. In such a case one or more Global Securities will be issued
in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of outstanding Convertible Debt Securities of the
series to be represented by such Global Security or Securities. Unless and
until it is exchanged in whole or in part for Convertible Debt Securities in
definitive certificated form, a Global Security may be transferred, in whole
but not in part, only to another nominee of the Depository for such series, or
to a successor Depository for such series selected or approved by the Company,
or to a nominee of such successor Depository.
The specific depository arrangement with respect to any series of
Convertible Debt Securities to be represented by a Global Security will be
described in the applicable Prospectus Supplement. The Company expects that
the following provisions will apply to depository arrangements.
Upon the issuance of any Global Security, and the deposit of such Global
Security with or on behalf of the Depository for such Global Security, the
Depository will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Convertible Debt Securities represented by
such Global Security to the accounts of institutions ("participants") that have
accounts with the Depository or its nominee. The accounts to be credited will
be designated by the underwriters or agents engaging in the distribution of
such Convertible Debt Securities or by the Company, if such Convertible Debt
Securities are offered and sold directly by the Company.
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Ownership of
beneficial interests in a Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of such beneficial interests will be effected only through, records
maintained by the Depository for such Global Security or by its nominee.
Ownership of beneficial interests in such Global Security by persons that hold
through participants will be shown on, and the transfer of such beneficial
interests within such participants will be effected only through, records
maintained by such participants. The laws of some jurisdictions may require
that certain purchasers of securities take physical delivery of such securities
in certificated form. The foregoing limitations and such laws may impair the
ability to own, pledge or transfer beneficial interests in such Global
Securities.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Convertible
Debt Securities represented by such Global Security for all purposes under the
Indenture. Unless otherwise specified in the applicable Prospectus Supplement
and except as specified below, owners of beneficial interests in such Global
Security will not be entitled to have Convertible Debt Securities of the series
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Convertible Debt Securities of
such series in certificated form and will not be considered the holders thereof
for any purposes under the Indenture. Accordingly, each person owning a
beneficial interest in such Global Security must rely on the procedures of the
Depository and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any rights
of a holder under the Indenture. The Company understands that, under existing
industry practices, if the Company requests any action of holders or an owner
of a beneficial interest in such Global Security desires to give any notice or
take any action a holder is entitled to give or take under the Indenture, the
Depository would authorize the participants to give such notice or take such
action, and participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Unless otherwise specified in the applicable Prospectus Supplement,
payments with respect to principal, premium, if any, and interest, if any, on
Convertible Debt Securities represented by a Global Security registered in the
name of a Depository or its nominee will be made to such Depository or its
nominee, as the case may be, as the registered owner of such Global Security.
The Company expects that the Depository for any Convertible Debt
Securities represented by a Global Security, upon receipt of any payment of
principal, premium or interest in respect of such Global Security, will
immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of such Depository. The Company
also expects that payments by participants to owners of beneficial interests in
such Global Security held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street names," and
will be the responsibility of such participants. None of the Company, the
Trustee or any agent of the Company or the Trustee shall have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global
Security, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
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If the Depository for any Convertible Debt Securities represented by a
Global Security is at any time unwilling or unable to continue as Depository or
ceases to be registered or in good standing under the Securities Exchange Act
of 1934, as amended, and a successor Depository is not appointed by the Company
within 90 days after the Company receives notice or becomes aware of such
condition, the Company will issue such Convertible Debt Securities in
definitive certificated form in exchange for such Global Security. In addition,
the Company may at any time and in its sole discretion determine not to have
any of the Convertible Debt Securities of a series represented by one or more
Global Securities and, in such event, will issue Convertible Debt Securities of
such series in definitive certificated form in exchange for all of the Global
Security or Securities representing such Convertible Debt Securities.
PLAN OF DISTRIBUTION
The Company may offer and sell the Securities to or through underwriters
or dealers, and also may offer and sell Securities directly to other purchasers
or through agents.
Each Prospectus Supplement will set forth the terms of the offering of the
particular series of Securities to which the Prospectus Supplement relates,
including the name or names of any underwriters, dealers or agents, the
purchase price or prices of the Securities, the proceeds to the Company from
the sale of such series of Securities, the use of such proceeds, any initial
public offering price or purchase price of such series of Securities, any
underwriting discount or commission, any discounts, concessions or commissions
allowed or reallowed or paid by any underwriters to other dealers, any
commissions paid to any agents and the securities exchanges, if any, on which
such Securities will be listed. Any initial public offering price or purchase
price and any discounts, concessions or commissions allowed or reallowed or
paid by any underwriter to other dealers may be changed from time to time.
Sales of Common Shares or Preferred Shares offered pursuant to any
Prospectus Supplement may be effected from time to time in one or more
transactions on the American Stock Exchange or, in appropriate circumstances,
The Toronto Stock Exchange, or in negotiated transactions or any combination of
such methods of sale, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, or at other negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company or from purchasers of Securities for whom
they may act as agents in the form of discounts, concessions or commissions,
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agents. Underwriters, dealers and agents that participate in the
distribution of Securities may be deemed to be underwriters, and any discounts
or commissions received by them from the Company and any profit on the resale
of Securities by them may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Company will be
described, in the applicable Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters
and agents who participate in the distribution of Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under Canadian and United States securities legislation.
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The Company may grant underwriters who participate in the distribution of
Securities an option to purchase additional Securities to cover over-
allotments, if any.
The place and date of delivery for the Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Securities in respect of which this Prospectus is being delivered (other than
Common Shares) will be a new issue of securities, will not have an established
trading market when issued and will not be listed on any securities exchange.
Any underwriters or agents to or through whom such Securities are sold by the
Company for public offering and sale may make a market in such Securities, but
such underwriters or agents will not be obligated to do so and may discontinue
any market making at any time without notice. No assurance can be given as to
the liquidity of the trading market for any such Securities.
Certain of the underwriters and their affiliates may from time to time
perform various commercial banking and investment banking services for the
Company, for which customary compensation is received.
EXPERTS
The consolidated financial statements of the Company, included in its
Annual Report on Form 10-K for the year ended December 31, 1995, have been
audited by Coopers & Lybrand, independent chartered accountants, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are, and audited financial statements to
be included in subsequently filed documents will be, incorporated herein by
reference in reliance upon the reports of Coopers & Lybrand pertaining to such
financial statements (to the extent covered by consents filed with the
Securities and Exchange Commission) given upon the authority of such firm as
experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to the validity of the Securities will be
passed upon for the Company by Paul, Weiss, Rifkind, Wharton & Garrison, New
York, New York, and by Koffman Birnie & Kalef, Vancouver, British Columbia.
Certain legal matters will be passed upon for the underwriters, if any, by
Davis, Graham & Stubbs LLP, Denver, Colorado, and by Stikeman, Elliott,
Toronto, Ontario, or by the counsel named in the applicable Prospectus
Supplement.
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GLOSSARY OF TERMS
GLOSSARY
The definitions of proven and probable reserves (ore) set forth below are
substantially the same as those used in Canada by certain provincial securities
regulatory authorities and are set forth in National Policy No. 2-A (of
Canada).
These definitions are substantially the same as those applied in the United
States by the Commission and those accepted by the United States Bureau of
Mines and the United States Geological Survey.
<TABLE>
<CAPTION>
PROVEN RESERVES that material for which tonnage is computed from dimensions revealed in outcrops or
trenches or underground workings or drill holes and for which the grade is computed
from the results of adequate sampling, and for which the sites for inspection, sampling
and measurement are so spaced and the geological character so well defined that the
size, shape and mineral content are established and for which the computed tonnage and
grade are judged to be accurate within limits which shall be stated and for which it
shall be stated whether the tonnage and grade of proven ore or measured ore are "in
situ" or extractable, with dilution factors shown, and reasons for the use of these
dilution factors clearly explained
<S> <C>
PROBABLE RESERVES that material for which tonnage and grade are computed partly from specific
measurements, samples or production data, and partly from projection for a reasonable
distance on geological evidence, and for which the sites available for inspection,
measurement and sampling are too widely or otherwise inappropriately spaced to outline
the material completely or to establish its grade throughout.
</TABLE>
The following definitions of the stages of the exploration and development
process are used by Golden Star. There can be no assurance that the
terminology used by Golden Star is consistent with the terminology used by
other companies in the mining industry or by industry analysts.
<TABLE>
<CAPTION>
early stage an early stage exploration project typically involves one or more targets within an
area which have been determined to merit further follow-up work based on a combination
of geological, geochemical and geophysical analysis. The objective of an early stage
project typically is to better define targets that have the potential to be advanced to
the next stage of exploration and level of financial commitment.
<S> <C>
INTERMEDIATE STAGE an intermediate stage exploration project typically involves establishing near surface
mineralization through such techniques as deep augering and trenching. Depending on
spacing, drilling (both reverse circulation ("RC") and core) may be an intermediate
stage exploration tool. The objective of the intermediate exploration stage is to
advance a project by identifying a well defined zone of mineralization that suggests
the potential of mineralization continuing to depth.
ADVANCED STAGE an advanced exploration stage project typically involves testing targets at depth and
generating the information necessary to develop a three dimensional geologic model of
the mineralized zone, which may be used to demonstrate mineralized materials and/or
reserves. This typically is accomplished by both core and RC drilling, although
reserves also can be established through trenching.
PREFEASIBILITY STAGE a prefeasibility stage project typically involves a target for which sufficient
geologic information exists about the mineralized zone to determine the reserves.
During the prefeasibility stage, drilling often is done to infill the information set
on the mineralized zone in order to increase the certainty of calculated reserves.
Wider spaced step-out drilling also is conducted to extend upon known mineralized zones
or to test for additional zones. The objective of the prefeasibility stage is to prove
sufficient reserves to allow for a rate of production over a sufficient period of time
to justify the investment of capital to extract the reserves, based on various economic
and financial assumptions.
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FEASIBILITY STAGE during the feasibility stage, exploration continues in order to better define known
reserves of a project while attempting to further expand them. During this stage,
management of the project often is transferred to the operating partner which develops
the necessary engineering and costing for mining, processing, power and infrastructure,
as well as the designs for the plant and equipment required to construct and operate a
modern mining operation.
MINE mining is the process of transforming a valuable mineral reserve or deposit into
benefits for its owners (debt, equity and employees), governments and communities.
Exploration continues during the mining process and, in many cases, reserves are
expanded during the early years of mine operations as the exploration potential of the
deposit is realized.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
ALLUVIUM, ALLUVIALS a general
term for clay, silt, sand, gravel
or other material deposited by a
body of water usually during
recent geological time
ANOMALY a deviation from
uniformity or regularity in
geophysical quantities
ASSAY to analyze the proportions
of metals in an ore
BRECCIA a coarse-grained rock
composed of large angular pieces
of broken rock
CARBONATE a mineral compound
characterized by a fundamental
structure of carbon and oxygen
DEGRADATION the wearing down or
away, and the general lowering or
reduction of the Earth's surface
by the natural processes of
weathering and erosion
DIAMOND DRILLING a variety of
rotary drilling in which diamond
bits are used as the rock-cutting
tool to produce a recoverable
core of rock for observation and
assay
DIP the angle that a structural
surface, a bedding or fault
plane, makes with the horizontal,
measured perpendicular to the
strike of the structure
ELUVIAL an incoherent ore
deposit resulting from
decomposition or disintegration
of rock in place
FAULT a surface or zone of rock
fracture along which there has
been displacement
FORMATION the basic rock-
stratigraphic unit in the local
classification of rocks
GEOCHEMISTRY the study of the
distribution and amounts of the
chemical elements in minerals,
ores, rocks, solids, water, and
the atmosphere
GEOPHYSICS the study of the
Earth as a planet with three
areas of study: solid-earth,
atmosphere and hydrosphere, and
magnetosphere
GREENSTONE ancient volcanic-
sedimentary rock assemblages
HORIZON a plane of
stratification assumed to have
been once horizontal and
continuous
HYDROTHERMAL the products of the
actions of heated water, such as
a mineral deposit precipitated
from a hot solution
INTRUSION the process of
replacement of magma (naturally
occurring mobile rock material
generated within the Earth) in
pre-existing rock
MAFIC an igneous rock composed
mostly of one or more
ferromagnesian, dark-colored
minerals in its mode; also, said
of those minerals
MASSIVE said of a mineral
deposit, especially sulfides,
characterized by a great
concentration of ore in one
place, as opposed to a
disseminated or veinlike deposit
METALLURGY the science and art of
separating metals from their ores
by mechanical and chemical
processes
METAMORPHOSED the mineralogical
and structural adjustment of
solid rocks to physical and
chemical conditions which have
been imposed at depth below the
surface zones of weathering and
cementation
METASEDIMENT a sediment or
sedimentary rock which shows
evidence of having been subjected
to metamorphism
METAVOLCANIC a volcanic rock
which shows evidence of having
been subjected to metamorphism
MINERAL a naturally formed
chemical element of compound
having a definite chemical
composition and, usually, a
characteristic crystal form
MINERALIZATION a natural
occurrence in rocks or soil of
one or more metalliferous
minerals
OUTCROP that part of a geologic
formation or structure that
appears at the surface of the
earth; also, bedrock that is
covered only by surficial
deposits such as alluvium
OVERBURDEN barren rock material
overlying a mineral deposit
PAN CONCENTRATE a small
proportion, generally of heavy
minerals, typically of a
weathered rock or stream
sediment, obtained by manual use
of a "gold pan."
PLUNGE the inclination of a fold
axis or other geological
structure, measured by its
departure from the horizontal
PRECAMBRIAN all rocks formed
before Cambrian time, or more
than 600 million years ago
PROTEROZOIC the more recent
division of the Precambrian
PYRITE a common, pale-bronze or
brass-yellow, isometric iron
sulfide mineral
QUARTZ crystalline silica;
silicon dioxide
RADIOMETRIC SURVEY survey using
a radiation-measuring instrument,
usually to detect specific
elements in the ground
REVERSE CIRCULATION DRILLING a
drilling method used in
geological appraisals whereby the
drilling fluid passes inside the
drill stem to a down-the-hole
precision bit and returns to the
surface outside the drill stem
carrying chips of rock
SAPROLITE a soft, earthy, clay-
rich and thoroughly decomposed
rock formed in place by chemical
weathering of igneous,
sedimentary or metamorphic rocks
which retains the original structure of
the unweathered rock
SHEAR a strain resulting from stresses
that cause or tend to cause contiguous
parts of a body of rock to slide
relatively to each other in a direction
parallel to their plane of contact
SHEAR ZONE a tabular zone of rock that
has been crushed and brecciated by many
parallel fractures due to shear strain
SHIELD a large area of exposed basement
rocks in a craton commonly with a very
gently convex surface, surrounded by
sediment-covered platforms
STOCK an igneous intrusion that is less
than 100 square kilometers in surface
exposure
48
<PAGE>
STRIKE the direction or trend that a
structural surface, e.g. a bedding or
fault plane, takes as it intersects the
horizontal
SURFICIAL situated, formed or
occurring on the Earth's surface
ULTRAMAFIC an igneous rock composed
chiefly of mafic minerals
VEIN a thin, sheetlike igneous
intrusion into a crevice
WEATHERING the destructive process
constituting that part of erosion
whereby earthy and rocky materials on
exposure to atmospheric agents at or
near the Earth's surface are changed in
character with little or no transport of
the loosened or altered material
CONVERSION FACTORS AND ABBREVIATIONS
For ease of reference, the following conversion factors are provided:
1 acre = 0.4047 hectare
1 foot = 0.3048 meter
1 gram per tonne = 0.0292 ounce per ton
1 ton (2000 pounds) = 0.9072 tonne
1 metric tonne = 1,000 kg or 2,204.6 pounds
1 kilogram = 2.2 pounds or 32.151 oz
1 mile = 1.6093 kilometers
1 troy ounce = 31.1035 grams
1 square mile = 2.59 square kilometers
1 square kilometer = 100 hectares
1 kilometer = 0.6214 miles
1 meter = 1.0936 yards or 3.2808 feet
1 hectare = 2.4710 acres
The following abbreviations of measurements are used herein:
Au = gold m(2) = square meter
ct = carats m(3) = cubic meter
ct/m(2) = carats per square meter mg = milligrams
gm = grams] mg/m(3) = milligrams per cubic meter
g/t = grams per tonne mt = metric tonne
ha = hectares oz = troy ounces
km = kilometers oz/t = troy ounces per ton
km(2) = square kilometers t = ton (2,000 pounds)
kg = kilogram ppb = parts per billion
m = meter
49
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14 - OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth expenses, other than underwriting fees and
commissions, expected to be borne by the Registrant in connection with the
distribution of the securities being registered:
Securities and Exchange Commission registration fee U.S. $25,862
Blue Sky fees and expenses *
Stock exchange listing fees *
NASD filing fee *
Rating Agency fees *
Transfer Agent fees *
Legal *
Printing *
Accounting *
Miscellaneous *
=====
TOTAL U.S. $*
______________
* To be completed by amendment.
All amounts listed above, except for the registration fee and stock exchange
listing fees, are estimates.
ITEM 15 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 124 of the Canada Business Corporations Act ("CBCA") provides for
the indemnification of directors and officers of the Company. Under these
provisions, the Company may indemnify a director or officer, or former director
or officer or a person who acts or acted at the Company's request as a director
or officer of a body corporate of which the Company is or was a shareholder or
creditor and the heirs and legal representatives of such a person against all
costs, charges and expenses, including amounts paid to settle an action or
satisfy a judgment, reasonably incurred by such director or officer in respect
to any civil, criminal or administrative action or proceeding (other than in
respect of an action by or on behalf of the Company to procure a judgment in
its favor) to which such director or officer, former director or officer or
person who acts or acted at the Company's request as a director or officer is
made a party by reason of his position with the Company, if he fulfills the
following two conditions: (a) he acted honestly and in good faith with a view
to the best interests of the Company and (b) in the case of a criminal or
administrative action or proceeding that is enforced by a monetary penalty, he
had reasonable grounds for believing that his conduct was lawful. In respect
of an action by or on behalf of the Company to procure a judgment in its favor,
the Company, with the approval of a court, may indemnify a director or officer,
as a director or officer, former director or officer or person who acts or
acted at the Company's request as a director or officer against all costs,
charges and expenses reasonably incurred by him in connection with such action
if he fulfills the conditions set out in clauses (a) and (b) of the previous
sentence. Notwithstanding the foregoing, a director or officer, former
director or officer or person who acts or acted at the Company's
II-1
<PAGE>
request as a
director or officer is entitled to indemnification from the Company in respect
of all costs, charges and expenses reasonably incurred by him in connection
with the defense of any civil, criminal or administrative action or proceeding
to which he is made a party by reason of his position with the Company if he
was substantially successful on the merits in his defense of the action or
proceeding and he fulfills the conditions in clause (a) and (b) of the second
sentence of this paragraph.
Subject to the provisions of the CBCA, the By-laws of the Company provide
that the Company shall indemnify a director or officer, a former director or
officer, or a person who acts or acted at the Company's request as a director
or officer of a corporation in which the Company is or was a shareholder or
creditor against all losses and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by him in respect of any
civil, criminal or administrative proceeding to which he was made a party by
reason of being or having been a director or officer of the Company or other
corporation if he acted honestly and in good faith with a view to the best
interests of the Company or, in the case of a criminal or administrative action
or proceeding that is enforced by monetary penalty, he had reasonable grounds
in believing that his conduct was lawful. In addition, the By-laws provide
that the Company also shall indemnify any such person in such other
circumstance as the CBCA or law permits or requires. The Company has entered
into agreements with its directors and officers indemnifying such directors and
officers to the extent permitted by the CBCA and the Company's By-laws.
Reference is made to the form of Underwriting Agreement filed as an exhibit
to this Registration Statement pursuant to which the underwriters will agree to
indemnify the Company and its directors and officers against certain
liabilities, including liabilities under the Securities Act.
A directors' and officers' liability insurance policy is maintained by the
Company which insures directors and officers for losses as a result of claims
based upon the acts or omissions as directors and officers of the Company,
including liabilities arising under the Securities Act of 1933, and also
reimburses the Company for payments made pursuant to the indemnity provisions
under the CBCA.
ITEM 16 - EXHIBITS
Exhibit
NUMBER DESCRIPTION
1.1* Form of Underwriting Agreement
3.1 Articles of the Company (incorporated by reference to
Exhibit 1.1 to the Company's Registration Statement on
Form 20-F, filed on May 10, 1993), Articles of the Company
(incorporated by reference to Exhibit 2.1 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994) and Certificate of Amendment to the Articles of the
Company, dated July 29, 1996 (incorporated by reference to
Exhibit (a)(3)(i) to the Company's Quarterly Report on Form
10-Q, filed on August 14, 1996)
3.2** Amendment to the Articles of the Company with respect to the
Preferred Shares.
II-2
<PAGE>
3.3 By-laws of the Company (incorporated by reference to
Exhibit 1.2 to the Company's Registration Statement on
Form 20-F, filed on May 10, 1993 and to Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995)
4.1** Form of Indenture for the Convertible Debt Securities
4.2** Form of Convertible Debt Security (included in Exhibit 4.1)
4.3** Form of Common Shares Warrant Agreement
4.4** Form of Common Shares Warrant Certificate (included in
Exhibit 4.3)
4.5** Form of Preferred Shares Warrant Agreement
4.6** Form of Preferred Shares Warrant Certificate (included in
Exhibit 4.5)
4.7** Form of Convertible Debt Securities Warrant Agreement
4.8** Form of Convertible Debt Securities Warrant Certificate
(included in Exhibit 4.7)
4.9* Form of Common Share Certificate
4.10** Description of Preferred Shares (included in Exhibit 3.2)
4.11** Form of Preferred Share Certificate
5.1* Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
5.2* Opinion of Koffman Birnie & Kalef
12.1* Statement re Computation of Ratios
23.1 Consent of Coopers & Lybrand
23.2* Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in Exhibit 5.1)
23.3* Consent of Koffman Birnie & Kalef (included in Exhibit 5.2)
24.1 Powers of Attorney (included on signature pages)
25.1** Statement of Eligibility of Trustee on Form T-1
______________
*To be filed by amendment.
**Subsequent to the effective date of this Registration Statement, to be
filed by amendment or incorporated herein by reference.
ITEM 17 - UNDERTAKINGS
II-3
<PAGE>
The Registrant hereby undertakes that, for the purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in this Registration Statement shall
be deemed to be a new Registration Statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes:
(a)To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form
of the prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
and Exchange Act of 1934, that are incorporated by reference in the
Registration Statement.
(b)That for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of a Registration Statement in reliance upon Rule 430A
and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
of 1933 shall be deemed to be part of this Registration Statement as
of the time it was declared effective.
(c)That for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the
II-4
<PAGE>
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(d)To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses is incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the Trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Denver, Colorado on September 25,
1996.
GOLDEN STAR RESOURCES LTD.
By: /S/ DAVID A. FENNELL
David A. Fennell
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below hereby constitutes and appoints David K. Fagin, David
A. Fennell and Gordon J. Bell, and each of them, his or her true and lawful
agent, proxy and attorney-in-fact, each acting alone, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to (i) act on, sign and file with the
Securities and Exchange Commission any and all amendments (including post-
effective amendments) to this registration statement together with all
schedules and exhibits thereto and any subsequent registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together
with all schedules and exhibits thereto, (ii) act on, sign and file such
certificates, instruments, agreements and other documents as may be necessary
or appropriate in connection therewith, (iii) act on and file any supplement to
any prospectus included in this registration statement or any such amendment or
any subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and (iv) take any and all actions which may
be necessary or appropriate in connection therewith, granting unto such agents,
proxies and attorneys-in-fact, and each of them, full power and authority to do
and perform each and every act and thing necessary or appropriate to be done,
as fully for all intents and purposes as he or she might or could do in person,
hereby approving, ratifying and confirming all that such agents, proxies and
attorneys-in-fact, any of them or any of his or her or their substitutes may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
II-6
<PAGE>
NAME TITLE Date
/s/ DAVID K. FAGIN Chairman of the Board September 25, 1996
David K. Fagin
/s/ DAVID A. FENNELL President, Chief Executive September 25, 1996
David A. Fennell Officer and Director
(Principal Executive
Officer)
/s/ PIERRE GOUSSELAND Director September 25, 1996
Pierre Gousseland
/s/ JEAN-PIERRE LEFEBVRE Director September 25, 1996
Jean-Pierre Lefebvre
/s/ DONALD F. MAZANKOWSKI Director September 25, 1996
Donald F. Mazankowski
/s/ ERNEST C. MERCIER Director September 25, 1996
Ernest C. Mercier
/s/ ROGER D. MORTON Director September 25, 1996
Roger D. Morton
/s/ ROBERT MINTO Director September 25, 1996
Robert Minto
/s/ RICHARD A. STARK Director September 25, 1996
Richard A. Stark
/s/ GORDON J. BELL Vice President and Chief September 25, 1996
Gordon J. Bell Financial Officer (Principal
Financial and
Accounting Officer)
II-7
<PAGE>
INDEX TO EXHIBITS
Exhibit
NUMBER DESCRIPTION
1.1* Form of Underwriting Agreement
3.1 Articles of the Company (incorporated by reference to
Exhibit 1.1 to the Company's Registration Statement on
Form 20-F, filed on May 10, 1993), Articles of the Company
(incorporated by reference to Exhibit 2.1 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994) and Certificate of Amendment to the Articles of the
Company, dated July 29, 1996 (incorporated by reference to
Exhibit (a)(3)(i) to the Company's Quarterly Report on Form
10-Q, filed on August 14, 1996)
3.2** Amendment to the Articles of the Company with respect to the
Preferred Shares
3.3 By-laws of the Company (incorporated by reference to
Exhibit 1.2 to the Company's Registration Statement on
Form 20-F, filed on May 10, 1993 and to Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995)
4.1** Form of Indenture for the Convertible Debt Securities
4.2** Form of Convertible Debt Security (included in Exhibit 4.1)
4.3** Form of Common Shares Warrant Agreement
4.4** Form of Common Shares Warrant Certificate (included in
Exhibit 4.3)
4.5** Form of Preferred Shares Warrant Agreement
4.6** Form of Preferred Shares Warrant Certificate (included in
Exhibit 4.5)
4.7** Form of Convertible Debt Securities Warrant Agreement
4.8** Form of Convertible Debt Securities Warrant Certificate
(included in Exhibit 4.7)
4.9* Form of Common Share Certificate
4.10** Description of Preferred Shares (included in Exhibit 3.2)
4.11** Form of Preferred Share Certificate
5.1* Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
5.2* Opinion of Koffman Birnie & Kalef
II-8
<PAGE>
Exhibit
NUMBER
12.1* Statement re Computation of Ratios.
23.1 Consent of Coopers & Lybrand
23.2* Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in Exhibit 5.1)
23.3* Consent of Koffman Birnie & Kalef (included in Exhibit 5.2)
24.1 Powers of Attorney (included on signature pages)
25.1** Statement of Eligibility of Trustee on Form T-1
______________
*To be filed by amendment.
**Subsequent to the effective date of this Registration Statement,
to be filed by amendment or incorporated herein by reference.
II-9
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Golden Star Resources Ltd. on Form S-3 of our report, dated March
22, 1996, on our audits of the consolidated financial statements of Golden Star
Resources Ltd., as of December 31, 1995 and 1994, and for the years ended
December 31, 1995, 1994 and 1993. We also consent to the reference to our firm
under the caption "Experts."
/s/ Coopers & Lybrand
Coopers & Lybrand
Chartered Accountants
Calgary, Canada
September 23, 1996
