<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
__________
FORM 10-Q
__________
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period ended September 30, 1999
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________.
Commission file number 0-21708
GOLDEN STAR RESOURCES LTD.
(Exact Name of Registrant as Specified in Its Charter)
Canada 98-0101955
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1660 Lincoln Street,
Suite 3000, Denver, Colorado 80264-3001
(Address of Principal Executive Office) (Zip Code)
(303) 830-9000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days
Yes X No _____
Number of Common Shares outstanding as of November 15, 1999: 36,931,131
<PAGE>
GOLDEN STAR RESOURCES LTD.
INDEX
Part I - Financial Information
<TABLE>
<CAPTION>
<S> <C> <C>
Item 1. Financial Statements..................................................1
Item 2. Management's Discussion and Analysis of Financial Condition,
Results of Operations and Recent Developments.........................13
Item 3. Quantitative and Qualitative Disclosures About Market Risk............18
Part II - Other Information
Item 1. Legal Proceedings......................................................19
Item 6. Exhibits and Reports on Form 8-K.......................................19
Signatures.................................................................................21
</TABLE>
i
<PAGE>
Part I - Financial Information
ITEM 1. FINANCIAL STATEMENTS
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands of United States Dollars except share amounts)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
As of September 30, As of December 31,
ASSETS 1999 1998
------------------ ------------------
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 2,398 $ 7,350
Accounts receivable 4,277 511
Inventories 8,537 181
Prepaid expenses 189 174
--------- ----------
Total Current Assets 15,401 8,216
RESTRICTED CASH 6,000 -
DEFERRED EXPLORATION 37,410 58,203
INVESTMENT IN OMAI GOLD MINES LIMITED 1,023 1,337
MINING PROPERTY 2,651 -
FIXED ASSETS 399 685
OTHER ASSETS 84 156
--------- ----------
Total Assets $ 62,968 $ 68,597
========= ==========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 5,442 $ 921
Accrued wages and payroll taxes 630 779
--------- ---------
Total Current Liabilities $ 6,072 $ 1,700
LONG-TERM DEBT 2,254 2,948
CONVERTIBLE DEBENTURES 3,110 -
ENVIRONMENTAL REHABILITATION PROVISION 6,000 -
OTHER LIABILITIES 28 56
--------- ---------
Total Liabilities 17,464 4,704
--------- ---------
MINORITY INTEREST 7,019 5,422
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS' EQUITY
SHARE CAPITAL 158,777 159,163
(Common shares, without par value, unlimited
shares authorized. Shares issued and
outstanding: September 30, 1999 - 36,561,231;
December 31, 1998 - 30,292,249)
Equity component of convertible debentures 1,045 -
Stock option loans - (4,012)
DEFICIT (121,337) (96,680)
--------- --------
Total Shareholders' Equity 38,485 58,471
--------- --------
Total Liabilities and Shareholders'
Equity $ 62,968 $ 68,597
========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
1
<PAGE>
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in thousands of United States Dollars except per share amounts)
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
-------------------- --------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE
Interest and other $ 65 $ 189 $ 287 $ 606
------- ------- ------- -------
65 189 287 606
COSTS AND EXPENSES
Depreciation 33 60 115 180
General and administrative 488 1,971 2,350 5,427
Exploration expense 77 26 129 267
Abandonment and impairment of deferred exploration 20,482 199 23,745 199
Loss on sale of assets 16 - 8 -
Interest and bank charges 37 111 49 126
Foreign exchange loss (gain) 13 140 (18) 58
------- ------- ------- -------
21,146 2,507 26,378 6,257
LOSS BEFORE THE UNDERNOTED (21,081) (2,318) (26,091) (5,651)
Equity in earnings of Omai Gold Mines Limited - (170) - -
Premium on Omai Preferred Share Redemptions (143) 34 379 863
------- ------- ------- -------
Net loss before minority interest (21,224) (2,454) (25,712) (4,788)
Minority interest loss 834 318 1,056 787
------- ------- ------- -------
NET LOSS $(20,390) $(2,136) $(24,656) $(4,001)
======== ======= ======== =======
BASIC AND DILUTED LOSS PER SHARE $ (0.65) $ (0.07) $ (0.79) $ (0.13)
======== ======= ======== =======
Weighted Average Shares Outstanding
(Millions of shares) 31.4 30.0 31.4 30.0
======== ======= ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
2
<PAGE>
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of United States Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1999 September 30, 1998
-------------------- --------------------
<S> <C> <C>
Operating Activities:
Net loss $(24,656) $ (4,001)
Reconciliation of net loss to net cash used in operations:
Depreciation 115 180
Premium on Omai Preferred Share Redemptions (379) (863)
Abandonment and impairment of deferred exploration 23,745 199
Loss on sale of assets 8 -
Minority interest loss (1,056) (787)
--------- --------
Changes in non-cash operating working capital
Accounts Receivable (2,312) 1,073
Inventories 27 78
Accounts Payable 9 (1,940)
Other Current Assets 108 62
--------- --------
Total of changes in non-cash working capital (2,168) (727)
--------- --------
Net Cash Used in Operating Activities (4,391) (5,999)
--------- --------
Investing Activities:
Expenditures on mineral properties, net of joint venture
recoveries (2,952) (7,674)
Depreciation charged to projects 140 280
Equipment purchases (5) (49)
Proceeds from sale of equipment 87 32
Omai Preferred Share Redemptions 693 1,580
Payments for acquisition, net of cash acquired (81) -
Restricted cash for Bogoso rehabilitation (6,000) -
Other assets 72 (149)
--------- --------
Net Cash Used in Investing Activities (8,046) (5,980)
--------- --------
Financing Activities:
Restricted cash - 250
Issuance of convertible debentures 4,155 -
Repayment of stock option loans 638 -
Issuance of share capital, net of issue costs 2,927 1,139
Repayment of long term debt (693) -
Increase in minority interest 488 921
Other (30) (42)
--------- --------
Net Cash Provided by Financing Activities 7,485 2,268
--------- --------
Decrease in cash (4,952) (9,711)
Cash and short-term investments, beginning of period 7,350 17,399
--------- --------
Cash and short-term investments, end of period $ 2,398 $ 7,688
========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
3
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All tabular amounts in thousands of United States Dollars)
These financial statements and notes thereto should be read in conjunction with
the financial statements and related notes included in the annual report on Form
10-K for Golden Star Resources Ltd. (the "Company" or "Golden Star") for the
fiscal year ended December 31, 1998, on file with the Securities and Exchange
Commission and the Ontario Securities Commission (hereinafter referred to as
"the Company's 1998 10-K"). All amounts are in United States dollars unless
otherwise stated.
The unaudited financial statements as of September 30, 1999, and for the nine
months ended September 30, 1999 and 1998, reflect all adjustments, consisting
solely of normal recurring items, which are necessary for a fair presentation of
financial position, results of operations, and cash flows on a basis consistent
with that of the prior audited consolidated financial statements.
(1) LIQUIDITY AND GOING CONCERN
The Company anticipates that its current cash balance, proceeds from the
exercise of warrants, financing provided by joint venture partners, the sales of
property interests or assets and the sale of common shares, combined with
operating cash flows from the Bogoso mining operations will be sufficient to
fund planned operating and exploration expenditures for the balance of 1999 and
for the year 2000.
The Company has primarily relied on the capital markets to secure financing and,
while it has been successful in doing so in the past, there can be no assurance
it will be able to do so in the future. Whether and to what extent, alternative
financing options are needed by the Company or its subsidiaries will depend on a
number of factors including, among others, the acquisition of additional
properties, the price of gold and the market for gold equities and management's
assessment of the capital markets.
The Company has been and is subject to a further listing review after the filing
of this Form 10-Q by the American Stock Exchange and there can be no assurance
that continued listing will be granted. The three principle concerns of the
American Stock Exchange regarding the Company's listing have been a share price
below $1.00, the lack of reported earnings over the previous five years and the
going concern opinion issued by the Company's auditors at the 1998 year end. The
Company's acquisition of the Bogoso mine in Ghana is anticipated to
significantly address these issues, with improved valuations for its share price
already, expected earnings over the next twelve months at current gold prices
and the expected cash flow from the Bogoso operations.
(2) SUPPLEMENTARY CASH FLOW INFORMATION
During the nine months ended September 30, 1999, 679,012 shares were canceled
that were previously issued for options granted under the Company's Stock Option
Plan. The related stock option loans, principally to one former officer,
amounting to $3.3 million and collateralized only by the shares, were also
canceled.
(3) INVENTORIES
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ -----------------
<S> <C> <C>
Metal in Process and Ore Stockpiles $ 3,154 $ -
Materials and Supplies 5,383 181
-------- --------
$ 8,537 $ 181
(4) FIXED ASSETS
September 30, 1999 December 31, 1998
------------------ -----------------
Machinery and Equipment $ 2,950 $ 2,851
Accumulated Depreciation (2,551) (2,166)
-------- --------
$ 399 $ 685
</TABLE>
4
<PAGE>
(5) DEFERRED EXPLORATION
<TABLE>
<CAPTION>
Deferred Deferred
Exploration Exploration
Expenditures Capitalized Capitalized Joint Property Expenditures
as at Exploration Acquisition Venture Impairments & as at
Dec. 31, 1998 Expenditures Expenditures Recoveries Abandonments Sept. 30, 1999
=========================================================================================
<S> <C> <C> <C> <C> <C> <C>
GUYANA
Eagle Mountain $ 1,364 $ - $ - $ - $ - $ 1,364
Quartz Hill 1,347 - - - (1,347) -
Five Stars Gold 819 9 - - (828) -
Other 57 326 - - (310) 73
-----------------------------------------------------------------------------------------
Sub-total 3,587 335 - - (2,485) 1,437
-----------------------------------------------------------------------------------------
SURINAME
Benzdorp / Lawa 3,352 - - - (3,352) -
Gross Rosebel 14,543 409 - (180) - 14,772
Headley's Right of Exploration 313 1 - - (314) -
Thunder Mountain 456 1 - - (457) -
Saramacca 1,973 2 - (6) (1,969) -
Sara Kreek 588 - - - (588) -
Tempati Reconnaissance 347 1 - - (348) -
Tapanahony Reconnaissance 234 - - - (234) -
Kleine Saramacca 107 - - - (107) -
Lawa Antino 2,109 36 - - (2,145) -
Ulemari Reconnaissance 237 - - - (237) -
Other 283 130 - - (274) 139
-----------------------------------------------------------------------------------------
Sub-total 24,542 580 - (186) (10,025) 14,911
-----------------------------------------------------------------------------------------
FRENCH GUIANA
(Guyanor Ressources S.A.)
Dorlin 2,363 602 - (362) - 2,603
St-Elie 2,377 209 - - (2,586) -
Yaou 7,486 321 - (165) - 7,642
Paul Isnard / Eau Blanche 4,650 628 - - 5,278
Paul Isnard Alluvials 1,987 - - - - 1,987
Dachine 1,481 207 - - - 1,688
Other - 24 - - - 24
-----------------------------------------------------------------------------------------
Sub-total 20,344 1,991 - (527) (2,586) 19,222
-----------------------------------------------------------------------------------------
AFRICA (Pan African Resources
Corporation)
Ivory Coast / Comoe 4,304 217 - - (2,681) 1,840
Kenya / Ndori 2,565 52 - - (2,617) -
-----------------------------------------------------------------------------------------
Sub-total 6,869 269 - - (5,298) 1,840
-----------------------------------------------------------------------------------------
LATIN AMERICA (Southern Star
Resources Ltd)
Brazil / Abacaxis 2,498 400 - - (2,898) -
Brazil / Other 275 90 - - (365) -
-----------------------------------------------------------------------------------------
Sub-total 2,773 490 - - (3,263) -
-----------------------------------------------------------------------------------------
OTHER 88 - - - (88) -
-----------------------------------------------------------------------------------------
TOTAL $ 58,203 $ 3,665 $ - $ (713) $ (23,745) $ 37,410
=========================================================================================
</TABLE>
The recoverability of amounts shown for deferred exploration is dependent upon
the sale or discovery of economically recoverable reserves, the ability of the
Company to obtain necessary financing to complete the development, and upon
future profitable production or proceeds from the disposition thereof. The
amounts deferred represent costs to be charged to operations in the future and
do not necessarily reflect the present or future values of the properties.
During the quarter ended September 30, 1999, the Company recorded impairments
totaling $20.5 million of its deferred exploration projects. The impairments
were recorded in the third quarter following a review of all the Company's
exploration projects and after the consummation of the Bogoso Gold Limited
acquisition, and a shift of the Company focus from strictly
5
<PAGE>
exploration to a company with production, development and advanced stage
exploration. This shift also changes the focus of the corporate and project
budgets. The available funds will be more focused on the development and
acquisition of more advanced projects rather than on grass-roots exploration
projects. Also due to, but not limited to, the previously noted factors, the
Company is allowing some prospecting licenses to expire.
(6) CONVERTIBLE DEBENTURES
----------------------
On August 24, 1999, the Company issued a principal amount of $4,155,000 in
subordinated convertible debentures to raise financing for the acquisition of
Bogoso Gold Limited (see also Note 9). The debentures mature on August 24, 2004
and bear interest at the rate of 7.5% per annum from the date of issue, payable
semi-annually on February 15 and August 15 of each year, commencing on February
15, 2000.
The debentures are convertible at the option of the holder into common shares of
the Company at a conversion price of $.70 per share, subject to adjustment upon
the occurrence of certain events, such as but not limited to the payment of
dividends in the Company's share capital. Any portion of the debenture that is a
multiple of $1,000 may be converted into common shares at any time prior to the
maturity date of August 24, 2004, unless previously redeemed. The holder's right
of conversion will terminate on the date of redemption, if the Company has
chosen to redeem the debentures. Each $1,000 principal amount of debentures also
entitles the holder to warrants exercisable for 200 common shares of the Company
at a price of $1.50 per share until August 24, 2001, and $1.75 per share for the
remaining two years until August 24, 2003.
The debentures are redeemable by the Company (1) in the event of certain
developments involving Canadian withholding taxes at a redemption price of 100%
of the principal amount of the debentures to be redeemed, plus accrued interest
to the redemption date and (2) at the option of the Company on or after August,
2002 if the reported closing trading price on the American Stock Exchange of the
common shares as reported on the close of business for any 20 of the 25
consecutive trading days immediately prior to the date notice of redemption is
given is at least 125% of the conversion price.
The debentures are unsecured obligations of the Company and are subordinated in
right of payment to all existing and future indebtedness and other liabilities
of the Company and its subsidiaries. There are no financial restrictions or
covenants contained in the debentures.
(7) INVESTMENT IN OMAI GOLD MINES LIMITED
-------------------------------------
Details regarding the Company's investment in the preferred share equity of Omai
Gold Mines Ltd. ("OGML") and its share of equity losses not recorded for the
year ended December 31, 1998 and the nine months ended September 30, 1999, are
as follows:
Preferred Shares
----------------
December 31, 1998 $ 1,337
Less: Preferred Share Redemption (693)
Add: Premium on Preferred Share Redemption 379
-------
September 30, 1999 $ 1,023
=======
The Company's share of Accumulated Losses at:
December 31, 1998 $ (628)
=======
September 30, 1999 $(1,070)
=======
The approximate $0.7 million of preferred shares redeemed during the nine months
ended September 30, 1999 were used to reduce the outstanding loan balance to
OGML to $2.3 million.
(8) CHANGES TO SHARE CAPITAL
------------------------
During the nine months ended September 30, 1999, 24,994 shares were issued under
the Company's Employees' Stock Bonus Plan. Also during the nine months ended
September 30, 1999, 679,012 shares were canceled that were previously issued for
options granted under the Company's Stock Option Plan. The related stock option
loans, principally to one former officer, amounting to $3.3 million and
collateralized only by the shares, were also canceled. During the nine months,
the Company negotiated a repayment of one former officer's stock option loan in
the amount of $0.6 million, which was paid in full in May 1999. During the
quarter, the Company also completed a financing of both equity units and
convertible debentures with attached warrants, convertible into a total of
approximately 6.9 million common shares. Total proceeds from the sale of the
equity units were $3.4 million, comprised of 6,923,000 common shares and
warrants to purchase 3,461,500 common shares.
On June 9, 1999, the Company issued two warrants to an outside creditor to
purchase 1,500,000 common shares of the Company, in connection with the credit
facility that was arranged, but not used, to effect the purchase of BGL.
On August 24, 1999, the Company issued two warrants to purchase a total of
380,825 common shares of the Company, in connection with the equity financing
completed on the same date.
(9) ACQUISITION OF BOGOSO GOLD LIMITED
----------------------------------
On September 30, 1999, the Company and Anvil Mining NL, an Australian company
("Anvil"), completed their previously announced acquisition of 70% and 20%,
respectively, of the common shares of Bogoso Gold Limited, a Ghanaian company
("BGL"). The Government of Ghana retained its remaining 10% equity interest in
BGL. BGL is the owner of an operating gold mine in the Republic of Ghana, which
the Company and Anvil intend to continue to operate.
6
<PAGE>
The acquisition was completed pursuant to a purchase agreement among the
Company, Anvil and a consortium of banks led by the International Finance
Corporation and Deutsche Investitions und Entwicklungsgesellschaft mbH of
Germany. The initial purchase price for BGL was $6.5 million, which was funded
using working capital and proceeds from the Company's August 24, 1999 offering
of its subordinated convertible debentures, common shares and warrants. The
acquisition also included the assignment to the Company and Anvil of 78% and
22%, respectively, of the existing indebtedness of BGL.
The Company and Anvil may be required to make additional future payments to the
banks, depending on the price of gold and the potential acquisition of ore in
Ghana outside of the region of BGL's mining interests. These additional
payments are capped at $10 million in total and are expected to be funded from
Bogoso's cash flow. The gold price related payments are due as to 50% one year
after closing and 50% at the earlier of production ceasing or the second
anniversary after closing. The Company is obligated to escrow the estimated
payments six months and 18 months after closing, respectively. These payments
are equal to $183,333 multiplied by the amount, if any, that the average daily
gold price (on the London Bullion Market) over the period from closing to the
payment dates exceeds $255 per ounce. For example, if the gold price averages
$285 per ounce over the next two years, Golden Star and Anvil would have to pay
the sellers an extra $5.5 million as a purchase price adjustment. The payment
made on the first anniversary of the acquisition will be non-refundable and
credited against any payment due on the second anniversary. The resource
acquisition linked payment will be triggered if minable reserves equivalent to
50,000 ounces of gold are acquired elsewhere in Ghana for processing at the
Bogoso mill. In this case, Golden Star and Anvil will make an additional
payment to the sellers on the second anniversary of closing of $2.0 million,
irrespective of the gold price, but subject to the $10 million cap. These
amounts will be amortized over the remaining life of the mine.
The Company will be required to pay the sellers an additional $5.0 million on
the first anniversary of commencement of sulphide production at BGL, which would
be expected no sooner than 2003. Due to the uncertain nature of this contingent
consideration, no liability has been recorded as part of the purchase price
allocation. This payment, if made, will be amortized over the remaining life of
the mine.
Cost of acquisition
Purchase price $6,500
Transaction costs 1,948
Less: Anvil note receivable (1,444)
------
Cost of acquisition $7,004
======
Allocation of purchase price
Cash $6,923
Accounts receivable 1,453
Inventories 8,383
Other current assets 122
Mining assets 2,651
Accounts payable (4,362)
Long-Term liabilities (6,000)
Minority interest (2,166)
------
Total purchase price allocated $7,004
======
7
<PAGE>
The following is the pro-forma income and loss for the Company for the nine
months ended September 30, 1999, and 1998 (in summary form), showing the results
of operations had the BGL acquisition been completed on January 1, 1999, and
1998, respectively. The pro-forma information is presented for informational
purposes only and is not necessarily indicative of the results of operations
that actually would have been achieved had the transaction been consummated as
of that time.
<TABLE>
<CAPTION>
For the Nine Months Ended For the Nine Months Ended
September 30, 1998 September 30, 1999
------------------------- -------------------------
<S> <C> <C>
Revenue $ 27,964 $ 27,350
Net operating profit before
abandonment and impairment
of deferred exploration $ 6,374 $ 13
Abandonment and impairment
of deferred exploration $ (23,745) $ (199)
Net loss $ (17,183) $ (5,182)
Net loss per share $ (0.55) $ (0.17)
</TABLE>
(10) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND
THE UNITED STATES
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") in Canada which differ in certain
respects from those principles that the Company would have followed had its
financial statements been prepared in accordance with GAAP in the United States.
Differences which materially affect these consolidated financial statements are:
(a) For United States GAAP ("U.S. GAAP"), exploration and general and
administrative costs related to projects are normally charged to expense as
incurred. As such, the majority of costs charged to abandonment and
impairment of mineral properties under Canadian GAAP would have been
charged to earnings in prior periods under U.S. GAAP. Property acquisition
costs are capitalized for both Canadian and U.S. GAAP.
(b) For periods prior to May 15, 1992 (the "Amalgamation"), the Company's
reporting currency was the Canadian dollar. Subsequent to the Company's
Amalgamation and relocation of its corporate headquarters to the United
States, the reporting currency was changed to the U.S. dollar. As such,
for the financial statements for periods prior to May 15, 1992, the
Company's financial statements were translated into U.S. dollars using a
translation of convenience. U.S. GAAP requires translation in accordance
with the current rate method.
(c) Under U.S. GAAP, the investment in Omai Gold Mines Limited would have been
written off in prior years and, therefore, the entire Omai Preferred Share
Redemption would have been included in income. Under Canadian GAAP, a
portion of the Omai Preferred Share Redemption is included in income with
the remainder reducing the carrying value of the Company's preferred stock
investment.
(d) Canadian GAAP allows classification of investments which are capable of
reasonably prompt liquidation as current assets. As such, all of the
Company's investments are included under the caption "short-term
investments" on the balance sheet under current assets. U.S. GAAP requires
classification as current or long term assets based upon the anticipated
maturity date of such instruments. Under U.S. GAAP, cash (and cash
equivalents) includes bank deposits, money
8
<PAGE>
market instruments, and commercial paper with original maturities of three
months or less. Canadian GAAP permits the inclusion of temporary
investments with maturities greater than 90 days in cash.
(e) The Company eliminated its accumulated deficit through the Amalgamation
(defined as a quasi-reorganization under U.S. GAAP) effective May 15, 1992.
Under U.S. GAAP, the cumulative deficit was greater than the deficit under
Canadian GAAP due to the write-off of certain deferred exploration costs
described in (a) above.
(f) Under U.S. GAAP, available-for-sale securities are recorded at fair value
and unrealized gains and losses are recorded as a separate component of
shareholders' equity. Fair value is determined by quoted market prices.
(The Company has no available-for-sale securities as of September 30,
1999.)
(g) Under U.S. GAAP, items such as foreign exchange gains and losses are
required to be shown separately as other comprehensive income and total
comprehensive income.
(h) Canadian GAAP allows certain non-recurring internal costs related to
corporate transactions to be capitalized and subsequently amortized. The
Company has charged internal costs related to the acquisition of BGL to
expense under U.S. GAAP.
(i) Under U.S. GAAP, no portion of proceeds from the issuance of convertible
debt securities is accounted for as attributable to a conversion feature,
when such feature is not beneficial. Under Canadian GAAP, this element of
the proceeds is treated as additional capital, and accreted over the period
of optional conversion as interest expense.
9
<PAGE>
Had the Company followed U.S. GAAP, certain items on the statements of
operations and balance sheets would have been reported as follows:
<TABLE>
<CAPTION>
For the nine months ended
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
Net loss under Canadian GAAP $(24,656) $(4,001)
Net effect of the deferred exploration expenditure on loss for
the period (a) 13,841 (7,275)
Effect of Omai preferred share redemption (c) 314 717
Foreign exchange loss (gain)(g) (18) 58
Effect of capitalized internal acquisition costs (h) (160) -
---------- --------
Net loss under U.S. GAAP before minority interest (10,679) (10,501)
Adjustment to minority interest 425 588
---------- --------
Net loss under U.S. GAAP (10,254) (9,913)
Other comprehensive income-foreign exchange loss 18 (58)
---------- --------
Comprehensive income (g) $(10,236) $(9,971)
========== =========
Net loss per share under U.S. GAAP $ (0.33) $ (0.33)
========== =========
</TABLE>
10
<PAGE>
The effects of the differences in accounting under Canadian GAAP and U.S. GAAP
on the balance sheets and statements of cash flows are as follows:
Balance Sheet
<TABLE>
<CAPTION>
As of September 30, 1999 As of December 31, 1998
Canadian GAAP U.S. GAAP Canadian GAAP U.S. GAAP
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Cash (d) $ 2,398 $ 2,398 $ 7,350 $ 3,145
Short-term investments (d) - - - 1,590
Other current assets 13,003 13,003 866 866
Restricted cash 6,000 6,000 - -
Acquisition, deferred exploration 37,410 11,232 58,203 18,183
and development (a)
Investment in Omai Gold 1,023 - 1,337 -
Mines Limited (c)
Mining property (h) 2,651 2,491 - -
Long-term investments (d) (f) - - - 2,615
Other assets 483 483 841 841
--------- --------- --------- ---------
Total Assets $ 62,968 $ 35,607 $ 68,597 $ 27,240
========= ========= ========= =========
Liabilities $ 17,464 $ 18,509 $ 4,704 $ 4,704
Minority interest (a) 7,019 6,807 5,422 5,637
Share capital, net of stock option 158,777 155,988 155,151 152,360
loans (e)
Equity component of
convertible debentures (i) 1,045 - - -
Cumulative translation - 1,595 - 1,595
adjustments (b)
Accumulated comprehensive
Income (g) - (575) - (593)
Deficit (a) (c) (121,337) (146,717) (96,680) (136,463)
--------- --------- --------- ---------
Total Liabilities and
Shareholders' Equity $ 62,968 $ 35,607 $ 68,597 $ 27,240
========= ========= ========= =========
</TABLE>
Statements of Cash Flows
<TABLE>
<CAPTION>
Operating Investing Financing
Net cash provided by (used in): Activities Activities Activities
---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Canadian U.S. Canadian U.S. Canadian U.S.
GAAP GAAP GAAP GAAP GAAP GAAP
---- ---- ---- ---- ---- ----
For the nine months ended
September 30, 1999 $ (4,391) $ (8,039) $ (8,046) $ (193) $ 7,485 $ 7,485
For the nine months ended $ (5,999) $(11,941) $ (5,980) $ (967) $ 2,268 $ 2,309
September 30, 1998
</TABLE>
The statements of cash flows reflect the impact of the previously discussed
adjustments (a) (c) (d) (e) (g). The following is supplementary cash flow
information:
During the nine months ended September 30, 1999, 679,012 shares were canceled
that were previously issued for options granted under the Company's Stock Option
Plan. The related stock option loans, principally to one former officer,
amounting to $3.3 million and collateralized only by the shares, were also
canceled.
11
<PAGE>
Operations by Geographic Area under U.S. GAAP
<TABLE>
<CAPTION>
Operating Revenues Net Loss Identifiable Assets
<S> <C> <C> <C>
For the nine months ended
September 30, 1999
South America $ 13 $ (8,140) $ 12,555
Africa - (1,307) 10,894
Corporate 274 (807) 12,158
----- -------- --------
$ 287 $(10,254) $ 35,607
===== ======== ========
For the nine months ended
September 30, 1998
South America $ 68 $ (6,122) $ 21,535
Africa (3) (2,793) 1,125
Corporate 541 (998) 8,141
----- -------- --------
$ 606 $ (9,913) $ 30,801
===== ======== ========
</TABLE>
(11) COMMITMENTS AND CONTINGENCIES
-----------------------------
Texmine Litigation
On December 17, 1998, Societe des Mines de St. Elie ("SMSE") notified Texmine,
the owner of the Dieu-Merci project, of its intention to terminate the Dieu-
Merci option agreement. SMSE is a wholly owned subsidiary of Guyanor Ressources
S.A., the Company's 71% owned French subsidiary. After several attempts to
substantially reduce or eliminate the minimum commitments and property payments
specified in the agreement failed, SMSE decided to withdraw from the option
agreement. Following the termination of the option agreement, Texmine demanded
from SMSE a payment of FF 2,000,0000 (approximately $350,000), which according
to Texmine is owed to it in spite of the termination of the option agreement.
SMSE does not believe that such sum is owed. A judgment was received on June
30, 1999 by a judge of the Tribunal of Grande Instance of Cayenne. The judge
concluded that he did not have the authority to hear the case. The delay to
appeal the decision has expired. There can be no assurance that Texmine will
not bring this litigation to arbitration. SMSE intends to defend itself
vigorously against any other legal action that Texmine may take in the future.
Contingency
As previously disclosed, the Company may be required to make future payments to
the sellers of BGL based on the average gold price for a defined period of time
and future resource acquisitions. The total of the payments is capped at $10.0
million, payable in two annual installments. The Company may also have to make
a payment of $5 million to the sellers if a commercial sulphide mining operation
is put into production at the BGL mine. [See also Note 9 for more information]
Letters of Credit and Guarantee
On April 30, 1999, the Company restricted the use of and transferred $2.2
million as a deposit for the $2.0 million letter of credit issued in connection
with the acquisition of BGL. This letter of credit was arranged in favor of the
vendors of BGL. On September 30, 1999, the vendors of BGL withdrew $2.0 million
to satisfy a portion of the purchase price. The remaining $0.2 million, net
credit fees, was released back to the Company.
12
<PAGE>
(12) SUBSEQUENT EVENTS
-----------------
On October 27, 1999, the Company filed with the Securities and Exchange
Commission a Registration Statement on Form S-3 with respect to the proposed
issuance of up to 2,261,650 common shares. The purpose of this prospectus is to
allow certain stockholders to offer and sell up to 2,261,650 common shares that
may be issued to these stockholders upon exercise of warrants of the Company
held by them.
In October, 1999, the Company modified the exercise price of the warrants to
purchase 1,500,000 common shares of the Company issued to Elliott Associates, L.
P. and Westgate International, L. P.
On October 26, 1999, the Company issued two warrants to purchase a total of
380,825 common shares of the Company, in connection with the completion of the
August 24 equity financing and the closing of the BGL acquisition.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, RESULTS OF
----------------------------------------------------------------------
OPERATIONS AND RECENT DEVELOPMENTS
----------------------------------
The following discussion should be read in conjunction with the accompanying
consolidated financial statements and related notes. The financial statements
have been prepared in accordance with Canadian generally accepted accounting
principles ("GAAP"). For U.S. GAAP reconciliation see attached financial
statement Note 10.
Special Note Regarding Forward Looking Statements
- -------------------------------------------------
The U.S. securities laws provide a "safe harbor" for certain forward looking
statements. This quarterly report contains "forward looking statements" that
express expectations of future events or results. All statements based on
future expectations rather than historical facts are forward looking statements
that involve a number of risks and uncertainties, and the Company cannot give
assurance that such statements will prove to be correct.
These forward looking statements include statements regarding: the impact of
the acquisition of Bogoso Gold Limited ("BGL") on the Company's future
liquidity, cash flows, financial requirements, operating results and capital
resources; the operational and financial performance of BGL; the impact of the
Company's shift in business strategy; cash operating costs and expenses;
percentage increases and
13
<PAGE>
decreases in production for the Company's mines; schedules for completion of
feasibility studies; potential increases in reserves and production; the timing
and scope of future drilling and other exploration activities; expectations
regarding permits and commencement of mining or production; and anticipated
recovery rates.
Factors that could cause the Company's actual results to differ materially from
these statements include changes in gold prices, unanticipated grade recovery,
geological, metallurgical, processing, access, transportation of supplies, water
availability or other problems, results of current and future exploration
activities, results of pending and future feasibility studies, changes in
project parameters as plans continue to be refined, political, economic and
operational risks of foreign operations, joint venture relationships,
availability of materials and equipment, the timing of receipt of governmental
permits, capitalization and commercial viability, the failure of plant,
equipment or processes to operate in accordance with specification or
expectations, accidents, labor disputes, delays in start-up dates, environmental
costs and risks, and general domestic and international economic and political
conditions.
Results of Operations
Nine Months Ended September 30, 1999 Compared to the Nine Months Ended September
- --------------------------------------------------------------------------------
30, 1998
- --------
During the third quarter of 1999, the Company recognized a net loss of $20.4
million or $0.65 per share as compared to a net loss of $2.1 million or $0.07
per share for the third quarter of 1998. During the third quarter of 1999, the
Company recorded $20.5 million in property abandonment charges and write-downs
compared to $0.2 million for the similar period in 1998. The significant write-
downs recorded in the third quarter of 1999 are due to the fundamental shift in
the direction and focus of the Company from an exploration only, to a
production, development and advanced stage exploration company. With the
consummation of the acquisition of Bogoso Gold Limited, the Company completed
the first major objective of management's shift of the Company's focus. As a
result, the Company must continually consolidate and rationalize exploration and
development activities, which will impact the corporate and project budgets. The
available funds will be more focused on the development and acquisition of
advanced projects rather than on grass-roots exploration projects. At September
30,1999, the Company undertook a review of the carrying value of all of its
exploration properties. As a result, the Company expensed $23.7 million, for the
nine months ended September 30, 1999, for the write-off or abandonment of
several projects and prospecting licenses. Many of these properties will be
retained and could be actively explored again in the future, but the write-down
at present reflects their potential, in view of continuing low gold price and
still depressed equity markets.
For the nine months ended September 30, 1999, the Company recognized a net loss
of $24.7 million or $0.79 per share, compared to a loss of $4.0 million or $0.13
per share for the similar period in 1998. The increased loss in the 1999 period
is primarily attributable to the property write-downs of $23.7 million in 1999
compared to $0.2 million in 1998.
Total revenues of $0.1 million during the third quarter of 1999 (as compared to
$0.2 million for the second quarter of 1998) decreased due to reduced cash
balances.
General and administrative expenditures decreased to $0.5 million during the
third quarter of 1999 as compared to $2.0 million during the third quarter of
1998. For the nine months ended September 30, 1999, general and administrative
expenditures decreased to $2.4 million compared to $5.4 million for the similar
period last year. These decreases were due to the Company's ongoing cost
reduction efforts, which included executive salary reductions and closure of
administrative offices in various locations in 1998.
14
<PAGE>
On September 30, 1999, the Company and Anvil Mining NL, an Australian company
("Anvil"), completed the acquisition of 70% and 20%, respectively, of the common
shares of Bogoso Gold Limited, a Ghanaian company ("BGL"). The Government of
Ghana retained its remaining 10% equity interest in BGL. BGL is the owner of
the Bogoso operating gold mine in the Republic of Ghana The acquisition was
completed pursuant to a purchase agreement among the Company, Anvil and a
consortium of banks led by the International Finance Corporation and Deutsche
Investitions und Entwicklungsgesellschaft mbH of Germany. The initial purchase
price for BGL was $6.5 million, which was funded using working capital and
proceeds from the Company's August 24, 1999 offering of its subordinated
convertible debentures, common shares and warrants. The acquisition also
included the assignment to the Company and Anvil of 78% and 22%, respectively,
of the existing indebtedness of BGL. (Further information relating to the
acquisition of BGL is disclosed in Note 9 to the interim consolidated financial
statements.) This acquisition is consistent with the Company's shift in focus
away from exploration only, to production, development and advanced stage
exploration.
Omai Gold Mines Limited ("OGML"), in which the Company maintains a 30% common
share equity interest, reported a net loss of $0.9 million for the third quarter
of 1999 and a net loss of $1.1 million for the nine months ended September 30,
1999, compared to a net loss of $1.3 million in the third quarter of 1998 and a
net loss of $4.6 million for the nine months ended September 30, 1998. During
the nine months ended September 30, 1999, OGML produced 226,109 ounces of gold,
compared to 238,421 ounces during the first nine months of 1998. The Company
recorded Class "I" preferred share redemptions from OGML of $0.7 million for the
nine months ended September 30, 1999, which was used to reduce the debt owed to
OGML. The Company recorded similar redemptions of $0.9 million in the same
period in 1998.
Liquidity and Capital Resources
As of September 30, 1999, the Company held cash and short term investments of
$2.4 million ($7.7 million as of September 30, 1998) and working capital of
approximately $9.3 million ($7.4 million as of September 30, 1998). The increase
in working capital resulted primarily from the Company's acquisition of BGL on
September 30, 1999.
The Company anticipates that its current cash balance, proceeds from the
exercise of warrants, financing provided by joint venture partners, the sale of
property interests or assets and the sale of common shares, combined with
operating cash flows from the Bogoso mining operations will be sufficient to
fund planned operating and exploration expenditures for the balance of 1999 and
for the year 2000.
The Company continues to closely monitor exploration progress at each of its
prioritized projects to ensure work programs and capital are allocated to those
projects that offer the greatest potential to generate additional reserves and
resources. Comprehensive cost reduction efforts continue at all operating
divisions and at the corporate headquarters to conserve cash resources. Most of
the exploration and development spending for the Company and its subsidiaries
represents discretionary spending and can be adjusted to reflect, among other
things, results of exploration and development activities, the successful
acquisition of additional properties or projects, the price of gold and
Management's assessment of capital markets.
Cash used in investing activities of $8.0 million for the nine months ended
September 30, 1999 (as compared to $6.0 million for the nine months ended
September 30, 1998) increased primarily due to the
15
<PAGE>
reduction in expenditures on exploration projects and a reduction in Omai
preferred share redemptions, offset by the acquisition of the Bogoso restricted
cash for environmental rehabilitation.
Cash provided by financing activities was $7.5 million for the nine months ended
September 30, 1999 (as compared to $2.3 million provided by financing activities
for the nine months ended September 30, 1998). The increase results from the net
effect of the issuance of shares and the convertible debentures. Share capital
increased by approximately $3.0 million for the nine months ended September 30,
1999, compared with an increase of $1.1 million during the nine months ended
September 30, 1998, due to the sale of common shares related to the financing of
the BGL acquisition.
The Company has been and is subject to a further listing review after the filing
of this Form 10-Q by the American Stock Exchange and there can be no assurance
that continued listing will be granted. The three principle concerns of the
American Stock Exchange regarding the Company's listing have been a share price
below $1.00, the lack of reported earnings over the previous five years and the
going concern opinion issued by the Company's auditors at the 1998 year end.
The Company's acquisition of the Bogoso mine in Ghana is anticipated to
significantly address these issues, with improved valuations for its share price
already, expected earnings over the next twelve months at current gold prices
and the expected cash flow from the Bogoso operations.
Africa (Pan African Resources Corporation)
- ------------------------------------------
Total exploration and acquisition expenditures in Africa for the third quarter
of 1999 amounted to $0.1 million (compared to $0.2 million during the third
quarter of 1998) and $0.3 million for the first nine months of 1999 (compared to
$2.6 million for the first nine months of 1998). The Company recorded $5.3
million in property write-downs during the nine months ended September 30, 1999,
compared with nil for the similar period of 1998. The Kenya, Ndori project
joint venture was terminated and as a result the property was impaired. The
only remaining project will be the Tanda joint venture with North and the
remaining properties will not have an exploration budget through the remainder
of 1999 and into 2000.
French Guiana (Guyanor Ressources S.A.)
- ---------------------------------------
Total exploration expenditures by Guyanor for the third quarter amounted to $0.4
million, offset by joint venture recoveries of $0.2 million (compared to
expenditures of $1.4 million and joint venture recoveries of $0.5 million in the
third quarter of 1998). Activities in French Guiana focused primarily on further
work at Yaou, Dorlin, Paul Isnard and Dachine. General and administrative
expenditures for Guyanor which were not reimbursed by joint venture partners
amounted to $0.2 million for the quarter ended September 30, 1999 (compared to
$0.8 million in the third quarter of 1998). The Company recorded $2.6 million in
property write-downs during the nine months ended September 30, 1999, compared
with nil for the similar period of 1998. The write-down on the St. Elie property
was a result of management's decision not to budget funds for further
exploration work.
Guyana
- ------
Exploration and acquisition expenditures in the third quarter of 1999 in Guyana
amounted to less than $0.1 million (compared to $0.3 million during the third
quarter of 1998). Activities in Guyana focused primarily on the restructuring
of the Guyana exploration activities and the recovery of cash from property
bonds on projects abandoned. Previously established Guyana reconnaissance
exploration joint
16
<PAGE>
ventures with BHP International were also terminated. The Company recorded $2.5
million in property write-downs during the nine months ended September 30, 1999,
compared with $0.1 million for the similar period of 1998. These impairments
resulted from management's decision to release the prospecting licenses and
property agreements on the various properties.
Suriname
- --------
Exploration expenditures in Suriname during the third quarter of 1999 focused
primarily on the Gross Rosebel project. Total spending in Suriname in the
quarter totaled $0.1 million, compared to expenditures of $0.4 million and
recoveries of $0.2 million during the third quarter of 1998. The reduction is
primarily a result of the placement of the Gross Rosebel project on care and
maintenance pending improved gold prices and resolution of certain development
issues. The new scoping study results announced August 5, 1999 may result in
renewed pre-development activities at Gross Rosebel. The South Benzdorp joint
venture with BHP International was formally terminated and the associated
property write-down recorded. The Company recorded $10.0 million in property
write-downs during the quarter ended September 30, 1999, compared with nil for
the similar period of 1998. These impairments resulted from the terminated joint
venture agreement and management's decision to allocate budgeted funds only to
Gross Rosebel and not to any other Suriname projects.
Southern Star Resources Ltd.
- ----------------------------
There were no exploration expenditures for the third quarter of 1999 as compared
to $0.1 during the third quarter of 1998. The decrease was due to the reduction
in exploration activities. The Company recorded $3.3 million in property write-
downs during the quarter ended September 30, 1999 compared with $0.2 million
during the similar period of 1998. The write-downs were a result of poor
exploration results and the Company's continuing reductions in exploration.
Management
- ----------
On August 16, 1999, the Company announced that Gordon J. Bell resigned as Vice
President and Chief Financial Officer of the Company. He also resigned as
Designee for Golden Star Resources Ltd. to Guyanor Ressources S.A. Under a
severance agreement, the Company paid Mr. Bell $99,000. On November 9, 1999, the
Board of Directors of the Company appointed Mr. Allan J. Marter as Vice
President and Chief Financial Officer of the Company.
During September 1999, Roger Morton, cofounder of the Company and a member of
the board of directors, resigned due to the demands of his principal occupation.
Dr. Morton was instrumental in directing the earliest exploration ventures of
the Company and also contributed in many other ways to the success of the
Company.
On October 6, 1999, the Company announced that Mr. Peter J. Bradford would
become President and Chief Executive Officer of the Company, on November 1,
1999. Mr. Bradford who has 20 years of experience in the mining industry,
including senior operational roles at the Gidgee and Plutonic mines in Western
Australia, Iduapriem mine in Ghana and the Siguiri project in Guinea, will
replace Mr. James E. Askew, whose resignation was effective on October 31, 1999.
During October 1999, James E. Askew, former President and CEO of Golden Star,
and the Company agreed to reduce the number of shares Mr. Askew has the right to
purchase under stock options granted by the Company from 1 million shares to
250,000. This agreement was reached as a result of the decision by Mr. Askew to
resign from his positions as President and CEO of the Company. Mr. Askew will
remain a director of the Company until the next meeting of the Company's
shareholders.
Year 2000 Compliance
- --------------------
The Company recognizes the importance of ensuring that its business operations
are not disrupted as a result of Year 2000 problems. The Company has prepared a
three step plan to identify and resolve Year 2000 issues. First, the Company
has compiled an inventory of its Information Technology ("IT") systems, and non-
IT systems (which are those which typically include "embedded" technology such
as microprocessors or chips) and is performing a survey of the state of Year
2000 readiness of third party suppliers, vendors, joint venture partners and
OGML. Second, the Company has prioritized the IT and non-IT systems and vendor
responses. Third, the Company has prepared a Year 2000 testing plan to assess
the ability of IT and non-IT systems to handle the Year 2000. Those systems that
are not Year 2000
17
<PAGE>
compliant are being modified or replaced to ensure that they are Year 2000
compliant. These steps are in various stages of completion and approximately 90%
completed on an overall basis. The Company estimates the internal and external
cost of Year 2000 compliance to be approximately $0.1 million. To date the
Company has spent approximately 90% of this estimate. Due to the acquisition of
BGL, the Company has also addressed the Year 2000 issue at the mine site. The
Company and local BGL personnel have completed the assessment and modified or
replaced all non-compliant systems or equipment with compliant systems.
The Company believes that the greatest risk presented by the Year 2000 problem
is from third parties such as suppliers and financial institutions who may not
have adequately addressed the problem. A failure of any such third party's
computer or other applicable systems in sufficient magnitude could materially
and adversely impact the Company. The Company is not presently able to quantify
this risk but believes that it is minimal, based upon the survey responses
received to date from third party suppliers, vendors, joint venture partners,
OGML and BGL related suppliers and vendors.
The Company maintains printed back-up of all material transactions both in
Denver and at BGL which could facilitate the continuation of business operations
and remediation of data loss in the event of a system failure.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
At December 31, 1998, the Company's exposure to market risk was limited to
changes in interest rates in the Company's investment portfolio (as disclosed in
Item 7A of the Company's 1998 10-K). As a result of the acquisition of BGL on
September 30, 1999, and the forecast production and the sale of gold from the
Bogoso mine, going forward the Company's operations will be affected
significantly by the market price of gold. Gold prices are influenced by
numerous factors over which the Company has no control, including expectations
with respect to the rate of inflation, the relative strength of the United
States dollar and certain other currencies, interest rates, global or regional
political or economic crises, demand for gold for jewelry and industrial
products, and sales by holders and producers of gold in response to these
factors. The Company has not hedged against fluctuations in the gold price.
18
<PAGE>
Part II - Other Information
ITEM 1. LEGAL PROCEEDINGS
-----------------
There are currently no material pending legal proceedings to which the Company
or any of its subsidiaries is a party or to which any of its properties or those
of any of its subsidiaries is subject. The Company and its subsidiaries are,
however, engaged in routine litigation incidental to their business. No
material legal proceedings involving the Company are pending, or, to the
knowledge of the Company, contemplated, by any governmental authority. The
Company is not aware of any material events of noncompliance with environmental
laws and regulations. The exact nature of environmental control problems, if
any, which the Company may encounter in the future cannot be predicted,
primarily because of the changing character of environmental regulations that
may be enacted within foreign jurisdictions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibit 27.1 Financial Data Schedule
(b) Reports on Form 8-K
* On July 1, 1999, the Company filed with the Securities and Exchange
Commission ("SEC") a report on Form 8-K dated June 29, 1999. The Company
reported that on July 1, 1999, the Company filed with the SEC a preliminary
prospectus supplement dated June 29, 1999 for a proposed financing of the
purchase price of its interest in Bogoso Gold Limited ("BGL"). The
preliminary prospectus contains substantial information regarding BGL and
pro forma financial information regarding the Company after giving effect
to the Acquisition.
* On August 12, 1999, the Company filed with the SEC a report on Form 8-
K dated August 10, 1999. The report indicated that on August 12, 1999, the
Company filed with the SEC a preliminary prospectus supplement for a
proposed financing of the purchase price of its interest in BGL. The
preliminary prospectus supplement contains substantial information
regarding BGL and pro forma financial information regarding the Company
after giving effect to the Acquisition.
* On August 19, 1999, the Company filed with the SEC a report on Form 8-
K dated August 18, 1999. The report indicated that BGL has provided the
Company unaudited interim financial data of BGL for the three months ended
June 30, 1999. This information reflects net income for the second quarter
of 1999 totaling $2.1 million. This net income resulted primarily from the
reversal of accruals as a result of revised estimates of BGL's
environmental liability. Without the reversal of this liability, BGL would
have incurred a net loss of approximately $1.1 million for the second
quarter of 1999.
* On August 31, 1999, the Company filed with the SEC a Form 8-K dated
August 24, 1999. The report announced the closing of a United States
offering (the "Offering") of $7,616,500 of the Company's securities. The
report also announced that on August 23, 1999, the Company filed a final
prospectus supplement with the SEC in connection with the financing of the
initial purchase price of its interest in BGL. A copy of the final
prospectus supplement was incorporated by reference as Exhibit 99.
19
<PAGE>
* On October 14, 1999, the Company filed with the SEC a Form 8-K dated
September 30, 1999. In the report the Company announced that on September
30, 1999, the Company and Anvil Mining NL, completed their previously
announced acquisition of 70% and 20%, respectively, of the common shares of
BGL.
20
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Golden Star Resources Ltd.
Date: 11/16/99 By: /s/ Peter J. Bradford
- -------------- -------------------
Peter J. Bradford
President and Chief Executive Officer
Date: 11/16/99 By: /s/ Allan J. Marter
- -------------- --------------------
Allan J. Marter
Chief Financial Officer
21
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<PAGE>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,398
<SECURITIES> 0
<RECEIVABLES> 4,277
<ALLOWANCES> 0
<INVENTORY> 8,537
<CURRENT-ASSETS> 15,401
<PP&E> 399
<DEPRECIATION> 115
<TOTAL-ASSETS> 62,968
<CURRENT-LIABILITIES> 6,072
<BONDS> 11,392
0
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<COMMON> 158,777
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 62,698
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