<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 30, 1999
GOLDEN STAR RESOURCES LTD.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
Canada 0-21708 98-0101955
(State or other Jurisdiction of (Commission file number) (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)
</TABLE>
(303) 830-9000
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
================================================================================
<PAGE>
Item 7. Financial Statements & Exhibits.
-------------------------------
On October 14, 1999, Golden Star Resources Ltd. ("Golden Star" or the
"Company") filed a Form 8-K to report the completion of its
acquisition of Bogoso Gold Limited ("BGL") on September 30, 1999.
Golden Star indicated that it would file the financial information
required by Item 7 of Form 8-K no later than December 14, 1999.
Golden Star is filing this amendment to provide the financial
information.
(a) Financial statements of business acquired
(b) Pro forma financial information
(c) Exhibits
The following exhibit was filed with the initial filing on Form 8-K on
October 14, 1999
Exhibit Number
(Reference to Item 601
of Regulation S-K Description of Exhibit
---------------------- ----------------------
2.1 Revised and Restated Agreement,
dated as of June 1, 1999, among the
Company, Anvil and the other parties
signatory thereto.
The following exhibit is being filed with this report on Form 8-K/A
23.1 Accountants consent
1
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GOLDEN STAR RESOURCES LTD.
By: /s/ Allan J. Marter
-----------------------------------------
Name: Allan J. Marter
Title: Vice President and Chief Financial
Officer
Dated: December 14, 1999
2
<PAGE>
Item 7. (a) Financial Statements of Business Acquired
Index to Historical BGL Financial Statements
<TABLE>
<S> <C>
1. Auditors' Opinion................................................... 4
2. Balance Sheets as of September 30, 1999 (unaudited)
and June 30, 1999 and 1998....................................... 5
3. Statements of Income and Expenditure for the three months
ended September 30, 1999 (unaudited) and 1998 (unaudited)
and for the years ended June 30, 1999, 1998 and 1997............. 6
4. Statements of Accumulated Deficit for the
three months ended September 30, 1999 (unaudited)
and for the years ended June 30, 1999, 1998 and 1997............. 7
5. Statements of Cash Flow for the three months ended September 30,
1999 (unaudited) and 1998 (unaudited) and for the
years ended June 30, 1999, 1998 and 1997......................... 8
6. Notes to the Financial Statements................................... 9-25
</TABLE>
3
<PAGE>
AUDITORS' REPORT TO THE MEMBERS OF
BOGOSO GOLD LIMITED
We have examined the financial statements of Bogoso Gold Limited for the years
ended June 30, 1999 and 1998 which have been prepared in accordance with the
accounting policies set out in Note 2.
Respective responsibilities of Directors and Auditors
The company's Directors are responsible for the preparation of the financial
statements. It is our responsibility to express an independent opinion, based
on our audit, on those financial statements prepared by the Directors.
Basis of opinion
We conducted our audits in accordance with generally accepted auditing
standards, which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. It also
includes an assessment of the accounting principles used and significant
estimates and judgments made by the directors, and an evaluation of the
overall adequacy of the presentation of the financial statements.
We planned and performed our audits so as to obtain all the information and
explanations which we considered necessary for the purposes of our audit. We
believe that our audits provide us with a reasonable basis for our opinion.
Without qualifying our report, we draw attention to Note 18 of the financial
statements which indicates that the Company had accumulated losses as of June
30, 1999. This factor along with other matters set forth in Note 18 indicates
that the company's ability to continue as a going concern requires continued
support from the new shareholders.
Opinion
In our opinion, the company has kept proper books and the financial
statements, which are in agreement with the books, give a true and fair view
of the state of the company's affairs at June 30, 1999 and 1998 and of the
loss and cash flow of the company for each of the three years ended June 30,
1999 in conformity with generally accepted accounting principles and comply
with the Ghana Companies Code 1963, (Act 179).
Chartered Accountants December 14, 1999
4
<PAGE>
BOGOSO GOLD LIMITIED
BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
Note US$'000 US$'000 US$'000
------------ -------- --------
<S> <C> <C> <C> <C>
Fixed Assets 3 21,874 23,093 27,692
Development expenditure 4 12,942 13,806 18,648
Deferred assets 5 2,945 2,243 973
------- ------- -------
37,761 39,142 47,313
------- ------- -------
Current assets
Inventories 6 8,383 8,233 6,041
Accounts receivable 7 1,574 1,982 1,396
Cash and cash equivalents 8 6,923 10,729 15,901
------- ------- -------
16,880 20,944 23,338
------- ------- -------
Current liabilities 9 (14,041) (13,552) (11,882)
------- ------- -------
Net current assets 2,839 7,392 11,456
------- ------- -------
Total assets less current
liabilities 40,600 46,534 58,769
------- ------- -------
Less:
Long term liabilities 10 (24,625) (24,564) (28,232)
Environmental
rehabilitation provision 11 (6,991) (10,209) (12,105)
------- ------- -------
(31,616) (34,773) (40,337)
------- ------- -------
8,984 11,761 18,432
======= ======= =======
Represented by:
Stated capital 12 78,292 78,292 78,292
Accumulated deficit (69,308) (66,531) (59,860)
------- ------- -------
8,984 11,761 18,432
======= ======= =======
</TABLE>
Approved by and signed on behalf of the Board of Directors on _________ 1999
Director........................................
Director .......................................
The notes on pages 9 to 25 form an integral part of these financial statements.
5
<PAGE>
BOGOSO GOLD LIMITIED
STATEMENTS OF INCOME AND EXPENDITURE
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three months Three months
ended ended
September 30, September 30, Year ended Year ended Year ended
Note 1999 1998 June 30, 1999 June 30, 1998 June 30, 1997
US$'000 US$'000 US$'000 US$'000 US$'000
------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sales proceeds 7,010 8,835 38,512 35,872 38,856
Less: Royalties on sales (210) (265) (1,155) (1,076) (1,166)
------ ------- ------- ------- -------
Net sale proceeds 6,800 8,570 37,357 34,796 37,690
Cost of sales
Depreciation of fixed assets 2(b) (1,636) (2,595) (8,171) (5,990) (4,107)
Amortization of
development expenditure 2(c) (864) (4,175) (4,842) (5,856) (2,537)
Other cost of sales (4,910) (6,398) (25,554) (19,286) (18,651)
------ ------- ------- ------- -------
(7,410) (13,168) (38,567) (31,132) (25,295)
Gross operating profit
(loss) (610) (4,598) (1,210) 3,664 12,395
General and administrative
expenses (1,870) (2,218) (5,234) (12,332) (14,427)
Loan and other interest
waived 10(d) - - - 6,293 -
Other income 275 82 2,203 778 2,533
------ ------- ------- ------- -------
Net operating (loss)/
profit before interest expense (2,205) (6,734) (4,241) (1,597) 501
Interest expense (572) (648) (2,430) (7,113) (7,190)
------ ------- ------- ------- -------
Net loss before taxation 14 (2,777) (7,382) (6,671) (8,710) (6,689)
Taxation 15 - - - - -
------ ------- ------- ------- -------
Net loss for the period (2,777) (7,382) (6,671) (8,710) (6,689)
====== ======= ======= ======= =======
</TABLE>
The notes on pages 9 to 25 form an integral part of these financial statements.
6
<PAGE>
BOGOSO GOLD LIMITED
STATEMENTS OF ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
(Unaudited)
Three months
ended Year ended Year ended Year ended
September 30, June 30, June 30, June 30,
1999 1999 1998 1997
US$`000 US$'000 US$'000 US$'000
-------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Accumulated deficit brought
forward (66,531) (59,860) (51,150) (44,461)
Loss for the period transferred
from statement of income and
expenditure (2,777) (6,671) (8,710) (6,689)
------- ------- ------- -------
Accumulated deficit carried
forward
(69,308) (66,531) (59,860) (51,150)
======= ======= ======= =======
</TABLE>
The notes on pages 9 to 25 form an integral part of these financial statements.
7
<PAGE>
BOGOSO GOLD LIMITED
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three months Three months
ended ended
September 30, September 30, Year ended Year ended Year ended
1999 1998 June 30, 1999 June 30, 1998 June 30, 1997
Note US$'000 US$'000 US$'000 US$'000 US$'000
------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net cash inflow from operating
activities (a) 19 (2,407) 939 8,363 8,882 17,476
------ ------ ------ ------ ------
Net cash outflow from
investment and servicing of
finance:
Interest paid - (551) (2,203) (1,773) (1,327)
Interest received 136 29 631 415 785
------ ------ ------ ------ ------
Net cash outflow/(inflow) from
investment and servicing of
finance (b) 136 (522) (1,572) (1,358) (542)
------ ------ ------ ------ ------
Cash flow from investing
activities:
Purchase of tangible fixed
assets and development
expenditure (417) (2,282) (4,124) (3,187) (3,251)
Sale of tangible fixed assets - - 27 5 116
Deferred mine and plant
expenditure (1,118) (179) (5,156) (1,128) (2,199)
------ ------ ------ ------ ------
Net cash outflow from investing
activities (c) (1,535) (2,461) (9,253) (4,310) (5,334)
------ ------ ------ ------ ------
Net inflow before financing
(a+b+c) (3,806) (2,044) (2,462) 3,214 11,600
------ ------ ------ ------ ------
Cash flow from financing
activities:
Repayment of loans - (1,578) (2,710) (3,933) (4,082)
------ ------ ------ ------ ------
Net cash outflow from financing (d) - (1,578) (2,710) (3,933) (4,082)
------ ------ ------ ------ ------
(Decrease)/ increase in cash
and cash equivalents (a+b+c+d) (3,806) (3,622) (5,172) (719) 7,518
Cash and cash equivalents at
beginning of period 10,729 15,901 15,901 16,620 9,102
------ ------ ------ ------ ------
Cash and cash equivalents at
end of period 6,923 12,279 10,729 15,901 16,620
====== ====== ====== ====== ======
</TABLE>
The notes on pages 9 to 25 form an integral part of these financial statements.
8
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS
1. The Company
-----------
Bogoso Gold Limited (the "Company"), known as Billiton Bogosu Gold Limited
until November 14, 1997, was granted a prospecting license by the
Government of Ghana on August 16, 1988 to work, develop and produce gold in
a defined concession area at Bogoso, Western Region, Ghana, for a period of
thirty years.
Under an agreement signed on November 30, 1994, and effective July 1, 1994,
the Shell Group transferred its assets of Billiton Group to Billiton Group
(BVI) Limited, a company incorporated in the British Virgin Islands whose
ultimate holding company was Gencor Limited, a company incorporated in
South Africa.
On July 1, 1997, the Company was owned 82% by Billiton Group (BVI) Limited,
with 8% held by International Finance Corporation and the remaining 10%
held by the Government of Ghana.
On April 27, 1998, the 82% holding was transferred to Orogen Holdings (BVI)
Limited due to a reorganisation within Gencor Limited. Subsequently, this
shareholding was transferred to Gencor Bogoso Holdings (BVI) Limited on May
19, 1998.
As part of a Shareholders Reorganisation Agreement effective June 30, 1998,
the 82% shareholding of Gencor was transferred to a Consortium of nine
banks, namely, International Finance Corporation, Credit Lyonnais, The
Sumitomo Bank Limited, Ecobank Transnational Inc., Societe Generale, Bank
Austria, Bank Internationale a Luxembourg, DB (Belgium) Finance N.V./S.A.
and Deutsche Investitions und Entwicklungsgesellschaft GmbH. In addition,
advances, loans and interest payable of US$60,070,000 effective June 30,
1998 were converted into 540,639 Class A Shares. See Note 12 to the
financial statements for details of the shareholders as at June 30, 1999.
Effective September 30, 1999, the shares of the consortium of nine banks
were sold to Golden Star Resources Ltd., a company incorporated in Canada
and Anvil Mining NL, a company incorporated in Australia. Following these
share transfers Golden Star Resources Ltd. owns 70% of the shares, Anvil
Mining NL owns 20% and the Government of Ghana owns the remaining 10%.
In addition, the consortium of nine banks assigned all debts owed them by
the Company to the new owners, Golden Star Resources Ltd and Anvil Mining
NL.
2. Accounting policies
-------------------
The following are the significant accounting policies adopted by the
Company in the preparation of these financial statements:
(a) Basis of accounting
-------------------
The financial statements have been prepared under the historical cost
convention and in accordance with the Ghana Companies Code 1963, (Act
179).
9
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2. Accounting policies (Continued)
-------------------------------
(b) Fixed assets
------------
These assets are valued at cost less accumulated depreciation. They
are depreciated over their expected useful lives, with varying lives
between different groups of assets ranging from five to ten years.
Change in method of depreciation:
With effect from July 1, 1997, the Company changed its estimate in
calculating the depreciation charge for the plant and machinery only.
The new method assumes the estimated remaining economic life of the
assets to be to June 30, 2003. Previously these assets were
depreciated over lives of between five and ten years.
The change in estimate was adopted as the board of directors
considered at its meeting on September 8, 1998 that the remaining life
of the assets was limited based on the present economic projections.
As a result of this change in estimated remaining economic life of the
assets, the selected assets carried on the balance sheet at July 1,
1997 will be written off in the profit and loss account over an
estimated remaining economic life to June 30, 2003. The financial
effect was that at June 30, 1998 the net book value of fixed assets
was reduced by an addtional depreciation charge of $735,000 to
$5,990,000 for the year.
(c) Development expenditure
-----------------------
Development expenditure is valued at cost and is amortised on a
straight line basis, taking into consideration the estimated economic
life of the specific project, which is reviewed on a regular basis and
to the extent to which this value exceeds its recoverable amount that
excess is fully written off in the financial year in which this is
determined.
Change in method of Amortisation:
Effective July 1, 1997, the Company revised the period for the
amortisation of its development expenditure. The revision assumes the
estimated remaining economic life of the project to be to June 30,
2003.
The change in method and estimate were adopted as the board of
directors considered at its meeting on September 8, 1998 that the
remaining life of the project was limited based on the present
economic projections.
As a result of this change in method of amortisation and estimated
remaining economic life of the project, the development expenditure on
the balance sheet at July 1, 1997 will be written off in the profit
and loss account over an estimated remaining economic life to June 30,
2003. The financial effect was that at June 30, 1998, the net book
value of development expenditure was reduced by additional
amortisation of $3,377,000 to $5,856,000 for the year.
(d) Deferred assets
---------------
Deferred assets mainly represent costs for major overhauls of
equipment to improve the equipment or extend their useful lives.
These costs are deferred and amortised over the remaining useful lives
of the equipment.
(e) Functional currency
-------------------
The functional currency of the Company is the United States dollar
since the capital invested, the financing of the Company and all sales
proceeds are in United States dollars, and approximately 70% of
expenditures are dollar related, with the remaining 30% being in
Ghanaian currency.
(f) Foreign currency translation
----------------------------
Current assets and liabilities denominated in foreign currencies are
translated into the functional currency (United States dollars) at the
rates of exchange ruling at the balance sheet date. Items in the
statement of income and expenditure are translated at the average
rate for the period. Gains and losses arising from the translation of
balances are dealt with through the income and expenditure statement.
10
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2. Accounting policies (Continued)
-------------------------------
(g) Inventories
-----------
Inventories have been valued at the lower of cost (weighted average
cost basis), and net realisable value (being estimated sales proceeds
less expenses incurred in making the sale).
For ore and gold inventories, cost comprises all direct production
costs and attributable operating expenses, including depreciation.
For consumable and spare parts, cost comprises direct purchase costs.
Where appropriate, provision for obsolescence has been included in the
inventory valuation.
(h) Accounts receivable
-------------------
Accounts receivable are shown at nominal value less, where necessary,
provision for bad and doubtful debts.
(i) Cash and cash equivalents
-------------------------
Cash and short term deposits includes all cash balances and highly
liquid investments with an original maturity of three months or less.
Cash at bank and in hand is shown at nominal value.
(j) Long-term and short-term liabilities
------------------------------------
These are shown at nominal value.
(k) Net sales proceeds
------------------
These are the proceeds from the sale of gold bullion, after deduction
of sales taxes, discounts, excise duties, and similar levies.
The sale of gold bullion was to Billiton Marketing and Trading B.V.
(BMT), under the terms of the Gold Refining and Marketing Agreement
dated January 18, 1990. This agreement ended on June 30, 1998.
Effective July 1, 1998, an agreement for gold purchase and refining
was agreed with Societe Generale.
(l) Cost of sales
-------------
These are the historical costs of direct production and production
support activities, including related depreciation, amortisation
salaries and wages.
(m) General and administrative expenses
-----------------------------------
The administrative expenses include related depreciation, salaries and
wages.
The unaudited financial statements as of September 30, 1999 and for the
three months ended September 30, 1999 and 1998, reflect all adjustments,
consisting solely of normal recurring items, which are necessary for a fair
presentation of the state of the Company's affairs and of the income and
expenditure and cash flow on a basis consistent with that of the prior
audited financial statements.
11
<PAGE>
BOGOSO GOLD LIMITED
3. Fixed Assets
------------
<TABLE>
<CAPTION>
Land & Plant & Mobile Other Capital
Buildings Machinery Equipment Equipment WIP Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------- ---------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Cost
At July 1, 1998 9,073 39,240 14,070 4,156 2,899 69,438
Additions - - - - 4,124 4,124
Transfers/ disposals/
reclassifications 129 1,306 2,283 451 (5,186) (1,017)
----- ------ ------ ----- ------ ------
At June 30, 1999 9,202 40,546 16,353 4,607 1,837 72,545
----- ------ ------ ----- ------ ------
Additions - - - - 417 417
Transfers/ disposals/
reclassifications 41 199 143 34 (417) -
----- ------ ------ ----- ------ ------
At Sept. 30, 1999 9,243 40,745 16,496 4,641 1,837 72,962
----- ------ ------ ----- ------ ------
Accumulated Depreciation
At July 1, 1998 5,362 21,034 12,167 3,183 - 41,746
Charge for the year 1,665 5,016 1,050 440 - 8,171
Transfers/ disposals - - (465) - - (465)
----- ------ ------ ----- ------ ------
At June 30, 1999 7,027 26,050 12,752 3,623 - 49,452
----- ------ ------ ----- ------ ------
Charge for the
period 281 888 334 133 - 1,636
Transfers/ disposals - - - - - -
----- ------ ------ ----- ------ ------
At Sept. 30, 1999 7,308 26,938 13,086 3,756 - 51,088
----- ------ ------ ----- ------ ------
Net book value
At Sept. 30, 1999 1,935 13,807 3,410 885 1,837 21,874
===== ====== ====== ===== ====== ======
At June 30, 1999 2,175 14,496 3,601 984 1,837 23,093
===== ====== ====== ===== ====== ======
At June 30, 1998 3,711 18,206 1,903 973 2,899 27,692
===== ====== ====== ===== ====== ======
</TABLE>
12
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. Development expenditure
-----------------------
<TABLE>
<CAPTION>
(Unaudited)
September 30,
1999 June 30, 1999 June 30, 1998
US$'000 US$'000 US$'000
------------- -------------- -------------
<S> <C> <C> <C>
Balance at beginning of period 13,806 18,648 24,430
Expenditure for the period - - 74
Less: Amortisation during the period
(See Note 2(c)) (864) (4,842) (5,856)
------ ------ ------
Balance at end of period 12,942 13,806 18,648
====== ====== ======
5. Deferred assets
---------------
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
US$'000 US$'000 US$'000
------------ ------- --------
Balance at beginning of period 2,243 973 3,709
Expenditure for the period 1,118 5,156 1,128
Less: Amortisation during the period
(see Note 2(d)) (416) (3,886) (3,864)
----- ------ ------
Balance at end of period 2,945 2,243 973
===== ====== ======
6. Inventories
--------------
Ore 2,205 2,465 784
In-process 949 677 563
Finished - - 398
----- ----- -----
3,154 3,142 1,745
Consumables and spare parts 5,229 5,091 4,296
----- ----- -----
8,383 8,233 6,041
===== ===== =====
7. Accounts receivable
----------------------
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
US$'000 US$'000 US$'000
-------------- -------- ---------
Sundry receivables 1,426 1,561 914
Employee advances 27 217 186
Prepaid expenses 121 204 296
----- ----- -----
1,574 1,982 1,396
===== ===== =====
</TABLE>
13
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
8. Cash and cash equivalents
-------------------------
<TABLE>
<S> <C> <C> <C>
Balance held within Ghana (40) (328) 320
Balances held externally 6,963 11,057 15,581
----- ------ ------
6,923 10,729 15,901
===== ====== ======
</TABLE>
9. Current liabilities
-------------------
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
Note US$'000 US$'000 US$'000
-------------- -------- --------
<S> <C> <C> <C> <C>
Long-term liabilities - current
portion 9(a) 4,931 4,914 3,956
Loan interest payable 9(b),10 4,748 4,177 4,049
Amounts owed to suppliers 1,782 1,363 1,490
Accruals and other payables 22 2,580 3,098 2,387
------ ------ ------
14,041 13,552 11,882
====== ====== ======
(a) Long-term liabilities - current
portion
Formerly -
International Finance
Corporation 10 3,725 3,725 2,937
Deutsche Investitions und
Entwicklungsgesellschaft GmbH 10 1,206 1,189 1,019
------ ------ ------
4,931 4,914 3,956
====== ====== ======
(b) Loan interest payable
Formerly -
International Finance
Corporation 3,605 3,180 3,024
Deutsche Investitions und
Entwicklungsgesellschaft GmbH 1,143 997 1,025
------ ------ ------
4,748 4,177 4,049
====== ====== ======
</TABLE>
14
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
10. Long term liabilities
---------------------
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
Note US$ '000 US$ '000 US$ '000
--------- --------- --------
<S> <C> <C> <C> <C>
Formerly -
International Finance Corporation 10(b)
Tranche 1 4,827 4,827 6,608
Tranche 2 13,630 13,630 13,630
------ ------- ------
18,457 18,457 20,238
Less: Current portion Tranche 1 9(a) (3,725) (3,725) (2,937)
------ ------- ------
14,732 14,732 17,301
------ ------- ------
Formerly -
Deutsche Investitions und 10(c)
Entwicklungsgesellschaft GmbH
Tranche 1 1,502 1,481 2,150
Tranche 2 4,268 4,211 4,471
------ ------- ------
5,770 5,692 6,621
Less : Current portion Tranche 1 9(a) (1,206) (1,189) (1,019)
------ ------- ------
4,564 4,503 5,602
------ ------- ------
International Finance Corporation -
advance 13 - 5,329 5,329
Anvil International Finance Ltd. 1,066 - -
Bogoso Holdings (Golden Star Resources Ltd.) 3,730 - -
Government of Ghana 533 - -
Interest payable on shareholders
advances 10(d) - - -
------ ------- ------
24,625 24,564 28,232
====== ======= ======
</TABLE>
(a) The loans are secured by a first fixed and floating charge on fixed
assets and the mining leases; the assignment of the rights of the
Company under the Gold Refining and Marketing Agreement; a charge on
the foreign exchange retention accounts of the Company under the
Foreign Exchange Retention Account Agreement; and the assignment of
insurances.
(b) International Finance Corporation loans, which totaled US$43,000,000
are divided into six loans comprising an A1 loan of US$9,570,000, an
A2 loan of US$4,430,000, a B1 loan of US$16,400,000, a B2 loan of
US$7,600,000, a C1 loan of US$3,400,000 and a C2 loan of US$1,600,000.
The A1, B1 and C1 loans were repayable in 15 semi-annual installments
which commenced on October 1, 1993 and thereafter each six months,
with the final installment due on October 1, 2000, attracting interest
at LIBOR plus 2.125% per annum on the principal outstanding.
The A2, B2 and C2 loans are repayable in 20 semi-annual installments
which were to commence on April 1, 1995 and thereafter each six months
with the final installment due on
15
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
10. Long term liabilities (Continued)
---------------------------------
October 1, 2004, attracting interest at LIBOR plus 2.5% per annum on
the principal outstanding. BGL has notified IFC pursuant to Section
3.03 (h) of the IFC Rescheduling and Amendatory Agreement that there
is insufficient cash available to be able to repay the respective
principal installments of the A2, B2 and C2 loans which fell due
commencing April 1, 1995.
The Company did make payments of interest in respect of the A2, B2,
and C2 loans in October 1998 and in April 1999 for the year ended June
30, 1999 and such interest is due on the next interest payment date
thereafter unless demanded or paid beforehand. In respect of the
amount of such payment due and unpaid, interest at 1% above LIBOR plus
2.125% per annum is in effect from the date any such amount became due
until the date of actual payment.
(c) Deutsche Investitions und Entwicklungsgesellschaft GmbH loans, which
totaled DM25,000,000 (approximately US$13.3 million at June 30, 1999)
are divided into two loans comprising an A1 loan of DM17,100,000
(approximately US$9.1 million) and an A2 loan of DM7,900,000
(approximately US$4.2 million).
The A1 loan was repayable in 15 semi-annual installments which
commenced on October 1, 1993 and thereafter each six months with the
final installment due on October 1, 2000 attracting interest at the
rate of 8.125% per annum on the principal outstanding.
The A2 loan is repayable in 20 semi-annual installments which
commenced on April 1, 1995 and thereafter each six months with the
final installment due on October 1, 2004, attracting interest at the
rate of 8.75% per annum on the principal balance outstanding. BGL has
notified the DEG that the relevant Tranche 2 cash availability is
insufficient for the Company to be able to repay the respective
principal installments of the A2 loan which fell due commencing April
1, 1995.
The Company did make a payment of interest in respect of the A2 loan
in October 1998 and in April 1999 for the year ended June 30, 1999 and
such interest shall be payable on the next interest payment date
thereafter, unless demanded or paid beforehand. Interest at 10.75%
per annum on the balance outstanding is in effect from the date any
such amount became due until the date of actual payment.
(d) The company obtained loans totaling US$13,800,000 divided into a
Tranche A loan of US$8,800,000 and Tranche B loan of US$5,000,000,
under the terms of the Billiton Loan Amending Agreement.
The Tranche A loan is repayable in 20 semi-annual installments
commencing on April 1, 1995 and thereafter each six months with the
final installment due on October 1, 2004, attracting interest at the
rate of LIBOR plus 2.5% per annum on the principal balance
outstanding. Penalty interest is charged at 1% above the relevant
interest rate if payment is not made.
The Tranche A loan was transferred to the consortium of nine banks,
the main shareholders of the Company, effective June 30, 1998. At this
date, the consortium converted the Tranche A loan of US$8,800,000 and
the cumulative interest of US$2,275,000 into Class A Shares (See Note
13).
The Tranche B loan of US$5,000,000 and the cumulative interest of
US$1,293,000 was waived on June 30, 1998.
(e) Interest on shareholders' advances of US$24,324,000 was converted into
Class A Shares effective June 30, 1998 (See Note 13).
11. Environmental rehabilitation provision
--------------------------------------
Costs are estimated based primarily upon environmental and regulatory
requirements and are accrued and charged to expense over the expected
economic life of the operation. The environmental rehabilitation provision
to meet closure costs is currently made at the rate of US$1 per milled ton
of ore. The provision was calculated at June 30, 1999 and 1998 at
$10,209,000 and $12,105,000 respectively. In the three month period ended
September 30, 1999 the company paid severance costs of approximately $3
million. The balance in the provision at September 30, 1999 is allocated
as to $6 million for environmental rehabilitation and approximately $1
million for social and economic programs.
16
<PAGE>
BOGOSO GOLD LIMITED
12. Stated capital
--------------
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
No. of shares No. of shares No. of shares
------------------ ------------- -------------
<S> <C> <C> <C>
Authorised shares
- -----------------
Class A shares 18,000,000 18,000,000 18,000,000
Class B shares 2,000,000 2,000,000 2,000,000
---------- ---------- ----------
20,000,000 20,000,000 20,000,000
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
---- ---- ----
No. of Amount No. of Amount No. of Amount
Issued: shares US$'000 shares US$'000 shares US$'000
- ------- -------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Class A shares 704,639 78,293 704,639 78,293 704,639 78,293
Class B shares 78,293 - 78,293 - 78,293 -
------- ------ ------- ------ ------- ------
782,932 78,293 782,932 78,293 782,932 78,293
======= ====== ======= ====== ======= ======
</TABLE>
The Company issued 540,639 additional Class A Shares for the conversion of
advances, loans and interest payable of US$60,070,000 as at June 30, 1998 (See
Note 13). In addition, the Government of Ghana was issued 60,071 Class B Shares
for no consideration, to maintain their proportionate 10% ownership of the
Company.
Effective September 30, 1999, the shares of the consortium of nine banks were
sold to Golden Star Resources Ltd., a company incorporated in Canada and Anvil
Mining NL, a company incorporated in Australia. Following these share transfers
Golden Star Resources Ltd. owns 70% of the shares, Anvil Mining NL owns 20% and
the Government of Ghana owns the remaining 10%.
17
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
12. Stated capital (Continued)
--------------------------
The shareholders of the Company as at September 30, 1999, June 30, 1999 and
1998 are as follows:
<TABLE>
<CAPTION>
(Unaudited)
September 30,
1999 June 30, 1999 June 30, 1999
Number Number Number
--------------- -------- --------
<S> <C> <C> <C>
Class A shares
International Finance Corporation - 216,270 216,270
DEG-Deutsche Investitions und
Entwicklungsgesellschaft mbh - 158,004 158,004
Societe Generale - 91,140 91,140
Credit Lyonnais - 76,897 76,897
Bank Austria AG - 45,566 45,566
DB (Belgium) Finance N.V./S.A - 45,566 45,566
The Sumitomo Bank Limited - 31,331 31,331
Banque International a Luxembourg - 28,477 28,477
Transnational Incorporated - 11,388 11,388
Anvil International Finance Ltd. 156,586 - -
Bogoso Holdings (Golden Star Resources Ltd.) 548,053 - -
------- ------- -------
704,639 704,639 704,639
Class B shares
Government of Ghana 78,293 78,293 78,293
------- ------- -------
Total Shares 782,932 782,932 782,932
======= ======= =======
</TABLE>
13. Shareholders' advances
----------------------
Shareholders' advances represented interest bearing foreign currency
advances made under the terms of the Revised Shareholders Financing
Agreement of March 22, 1994. These advances attracted interest at the rate
of 10% per annum. In accordance with letters of consent from the
shareholders, the advances, loans and interest payable to the consortium of
banks were converted into Class A Shares effective June 30, 1998. The IFC
advance of US$5,329,000 will not accrue any further interest on the
remaining principal from June 30, 1998.
18
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
14. Net loss before taxation is stated after charging/(crediting)
-------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
September 30, 1999 June 30, 1999 June 30, 1998
US$'000 US$'000 US$'000
------- ------- -------
<S> <C> <C> <C>
Auditors' remuneration 6 25 22
Bad and doubtful debts - 2 350
Directors' fees 3 36 6
Director's emoluments 41 162 162
Director's compensation for loss of office - - 68
Exchange (gain)/loss (31) (426) (210)
Interest received (137) (631) (415)
Inventory write down 1 40 2,078
Loss/(profit) on disposal of assets - (14) 16
Rehabilitation expenditure 338 1,352 2,125
</TABLE>
15. Taxation
--------
The Company has no taxation charge for the three months ended September 30,
1999 and 1998 or the years ended June 30, 1999, 1998 or 1997 as there are
significant tax losses to carry forward. However, the company has a tax
credit of U.S. $249,000 being Value Added Tax paid on inputs.
16. Capital commitments
-------------------
Capital expenditure authorised but not yet expended as at September 30,
1999, June 30, 1999 and at June 30, 1998 were $125,000, nil and $6,483,000,
respectively.
17. Contingent liabilities
----------------------
(a) Hedged gold
The Company had no hedged gold contracts as at September 30, 1999,
June 30, 1999, or June 30, 1998.
(b) Staff car loans
The Company had guaranteed car loans to senior staff provided through
Barclays Bank of Ghana Limited until early 1999. The balance
guaranteed as at June 30, 1998 amounted to $43,085.
19
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
18. Going concern and subsequent events
-----------------------------------
The company has accumulated losses of $66,531,000 as at June 30, 1999 due
to trading losses over the past years as a result of the high cost of
servicing a heavy debt portfolio and the declining gold price, as well as
working capital problems with the non-payment of external debt and limited
finance available for an on-going capital renewal program. The company has
been deferring payments due on long-term loans.
A major exploration program has been undertaken to identify proven and
probable oxide ore reserves to extend the life of the mine. In addition,
the exploration work has identified highly prospective targets and
investigations are underway into alternative sources of ore such as the
treatment of tailings.
As discussed in Note 1, effective September 30, 1999 the consortium of nine
banks sold their shares and assigned their debts owed them by the company
to new shareholders, Golden Star Resources Ltd and Anvil Mining NL.
19. Net cash flow from operating activities
---------------------------------------
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three months ended Three months ended Year ended Year ended
September 30, 1999 September 30, 1998 June 30, 1999 June 30, 1998
US$'000 US$'000 US$'000 US$'000
------------------ ------------------ -------------- -------------
<S> <C> <C> <C> <C>
Net operating loss before
interest expense (2,205) (7,382) (4,241) (1,597)
Depreciation 1,636 2,595 8,171 5,990
Amortisation of development
expenditure 864 4,175 4,842 5,856
Amortisation of deferred assets 416 2,253 3,886 3,864
(Increase)/decrease in inventories (150) (1,641) (2,192) 3,291
(Increase)/decrease in accounts
receivable 407 (338) (586) (371)
(Decrease)/increase in creditors (99) 381 584 (519)
Decrease in long term liabilities (3,140) 906 (1,896) (735)
Loan and interest waiver - - (6,293)
Exchange gain on loans - 19 (99) (205)
Loss/(profit) on disposal of
assets - - (14) 16
Interest income (136) (29) (631) (415)
Reclassification of fixed assets - - 539 -
------ ------ ------ ------
(2,407) 939 8,363 8,882
====== ====== ====== ======
</TABLE>
20
<PAGE>
BOGOSO GOLD LIMITED
20. Reclassification
----------------
The prior years comparative figures have been reclassified where applicable
to be consistent with the current year's presentation.
21. Generally Accepted Accounting Principles in the United States and Canada
------------------------------------------------------------------------
The financial statements have been prepared in accordance with generally
accepted accounting principles and in compliance with the Ghana Companies
Code 1963 (Act 179), which differ in certain respects from those principles
that the Company would have followed had its financial statements been
prepared in accordance with accounting principles generally accepted in the
United States or Canada. Differences which materially affect these
financial statements are:
(a) Under U.S. GAAP, items such as foreign exchange gains and losses are
required to be shown separately in the derivation of comprehensive
income. Under Canadian GAAP, foreign exchange gains and losses related
to the translation of foreign currency loans would be deferred and
amortised over the remaining period of the loan. As the currency of
measurement is the U.S. Dollar, loans denominated in deutschmarks are
considered foreign currency loans.
(b) Under U.S. GAAP, changes in accounting policies are accounted for in
the year of change and includes the cumulative effect of that
accounting change. Under Canadian GAAP, changes are applied
retroactively to prior period financial statements by restating the
prior years' financial statements and the prior year opening retained
earnings balance in the earliest year reported. In June 1998, the
Company changed its method of amortization of development expenditure
costs from units of production to straight line.
(c) Under U.S. GAAP, extraordinary items are usually limited to unusual
and infrequent events and include early extinguishment of debt. Such
items are reported separately in the statement of operations, net of
taxes, and included in the determination of net income. Under Canadian
GAAP, gains and losses from the early extinguishment of debt generally
do not meet the criteria for extraordinary items. During the year
ended June 30, 1998, creditors forgave portions of certain loans as
discussed Note 10.
(d) Under U.S. and Canadian GAAP, basic earnings per share of common stock
is calculated on the weighted average number of common shares
outstanding during the period and is required for each period
presented. Per share amounts are reflected for income before
extraordinary items, the cumulative effect of a change in accounting
principle and for net income.
(e) Under U.S. and Canadian GAAP, the impact of a change in accounting
estimate is recorded in the current reporting period, typically three-
month quarters. As of June 30, 1998, the Company changed the
estimated remaining useful lives of its plant and machinery and mine
to five years, effective as of July 1, 1997. Under U.S. and Canadian
GAAP, the impact of the change in estimate would have been recorded as
of April 1, 1998, resulting in a lower charge for depreciation and
amortization for the year ended June 30, 1998.
21
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
21. Generally Accepted Accounting Principles in the United States and Canada
------------------------------------------------------------------------
(Continued)
-----------
Had the Company followed GAAP in the United States and Canada, certain
items on the statements of operations would have been reported as follows:
Statements of Operations
(Stated in thousands of United States Dollars except per share amounts)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three months Three months Year ended Year ended Year ended
ended ended June 30, June 30, June 30,
Sept. 30, 1999 Sept. 30. 1998 1999 1998 1997
US$'000 US$'000 US$'000 US$'000 US$'000
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net loss as presented $ (2,777) $ (7,382) $ (6,671) $ (8,710) $ (6,689)
Foreign exchange gain (a) (65) 19 (238) (6) (75)
Change in accounting estimate (e) - - - 3,084 -
Extraordinary gain on extinguishment of debt (c) - - - (6,293) -
-------- -------- -------- -------- --------
Income before extraordinary item (2,842) (7,363) (6,909) (11,925) (6,764)
Extraordinary gain on extinguishment of debt (c) - - - 6,293 -
Cumulative effect of change in accounting
principle (b) - - - 1,083 -
-------- -------- -------- -------- --------
Net loss under U.S. GAAP (2,842) (7,363) (6,909) (4,549) (6,764)
Other comprehensive income - foreign exchange
gain (a) 65 (19) 238 6 75
-------- -------- -------- --------
Comprehensive income (a) $ (2,777) $ (7,382) $ (6,671) $ (4,543) $ (6,689)
======== ======== ======== ======== ========
Per share data (d):
Extraordinary gain on extinguishment of debt - - - $ 34.32 -
======== ======== ======== ======== ========
Cumulative effect of change in accounting
principle - - - $ 5.91 -
======== ======== ======== ======== ========
Basic and diluted net loss per share under U.S.
GAAP $ (3.55) $ (9.42) $ (8.82) $ (24.77) $ (36.71)
======== ======== ======== ======== ========
Weighted average shares outstanding (basic and
diluted) 782,932 782,932 782,932 183,369 182,222
======== ======== ======== ======== ========
Reconciliation to Canadian GAAP:
Net loss under U.S. GAAP (2,842) (7,363) (6,909) (4,549) (6,764)
Amortisation of foreign exchange gain (a) 53 38 162 28 50
Cumulative effect of change in accounting
principle applied retroactively 3,196 1,859 2,861 1,521 1,083
-------- -------- -------- -------- --------
Net loss under Canadian GAAP ( 407) (5,466) (3,886) (3,000) (5,631)
======== ======== ======== ======== ========
Net loss per share under Canadian GAAP $ (0.52) $ (6.98) $ (4.96) $ (16.36) $ (30.90)
======== ======== ======== ======== ========
</TABLE>
22
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
21. Generally Accepted Accounting Principles in the United States and Canada
------------------------------------------------------------------------
(Continued)
-----------
The effect of differences in accounting under U.S. GAAP and Canadian GAAP
on the balance sheets, statement of changes in shareholders' equity and
statements of cash flow are as follows:
Balance Sheet
<TABLE>
<CAPTION>
(Unaudited)
September 30, 1999 June 30, 1999
---------------------------------------- -----------------------------------------
Canadian U.S. Canadian U.S.
As presented GAAP GAAP As presented GAAP GAAP
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------- -------- ------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fixed assets 21,874 22,768 22,768 23,093 23,873 23,873
Development expenditure (b) 12,942 19,081 15,885 13,806 19,805 16,944
Accumulated comprehensive
income - - 384 - - 319
Accumulated deficit (69,308) (57,732) (65,525) (66,531) (58,139) (62,683)
Total shareholders' equity 8,984 16,348 13,152 11,761 18,790 15,929
</TABLE>
<TABLE>
<CAPTION>
June 30, 1998
-------------------------------------------------------
Canadian U.S.
As presented GAAP GAAP
US$'000 US$'000 US$'000
------------ -------- ----------
<S> <C> <C> <C>
Fixed assets 27,692 28,243 28,243
Development expenditure (b) 18,648 22,702 21,181
Accumulated comprehensive income - - 81
Accumulated deficit (59,860) (54,253) (55,774)
Total shareholders' equity 18,432 24,121 22,600
</TABLE>
Under U.S. GAAP, accruals and other payables would be separately disclosed
as follows:
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
US$'000 US$'000 US$'000
------------- -------- ---------
<S> <C> <C> <C>
Accrued payroll, taxes and bonus 305 594 494
Accrued redundancy costs 50 302 356
Accrued royalties 312 266 222
Accrued electricity 163 393 116
Accrued mining department costs 94 152 -
Other accrued liabilities 1,656 1,391 1,199
----- ----- -----
Total accruals and other payables 2,580 3,098 2,387
===== ===== =====
</TABLE>
23
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
21. Generally Accepted Accounting Principles in the United States and Canada
------------------------------------------------------------------------
(Continued)
-----------
Statement of Changes in Shareholders' Equity Under U.S. GAAP
<TABLE>
<CAPTION>
Accumulated
Other Total
Stated Comprehensive Shareholder Shareholders'
Class A Class B Capital Deficit Income Advances Equity
Shares Shares US$'000 US$'000 US$'000 US$'000 US$'000
------ ------ ------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1997 164,000 18,222 18,222 (51,225) 75 24,671 (8,257)
Comprehensive Income:
Net income (loss) 1998 (4,549) (4,549)
Translation adjustments 6 6
Comprehensive Income: (4,543)
Shares issued 540,639 60,071 60,071 60,071
Shareholder advances - - - - - (24,671) (24,671)
------- ------ ------- -------- ---- -------- --------
Balance at June 30, 1998 704,639 78,293 78,293 (55,774) 81 - 22,600
Comprehensive Income:
Net income (loss) 1999 (6,909) (6,909)
Translation adjustments 238 238
Comprehensive Income: (6,671)
Shares issued
Shareholder advances - - - - - - -
------- ------ ------- -------- ---- -------- --------
Balance at June 30, 1999 704,639 78,293 78,293 (62,683) 319 - 15,929
Comprehensive Income:
Net income (loss) 1999 (2,842) (2,842)
Translation adjustments 65 65
Comprehensive Income: (2,777)
Shares issued
Shareholder advances - - - - - - -
------- ------ ------- -------- ---- -------- --------
Balance at Sept. 30, 1999 704,639 78,293 78,293 (65,525) 384 - 13,152
</TABLE>
Statements of Cash Flows Under U.S. GAAP
<TABLE>
<CAPTION>
Net Cash Provided by (Used in): Operating Activities Investing Activities Financing Activities
-------------------- -------------------- --------------------
As presented U.S. GAAP As presented U.S. GAAP As presented U.S. GAAP
For the three month period ended US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
- -------------------------------- ------------ --------- ------------ --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Sept. 30, 1999 (Unaudited) (2,407) (2,250) (1,535) (1,556) - -
For the Years ended,
- --------------------
June 30, 1999 8,363 5,957 (9,253) (8,419) (2,710) (2,710)
June 30, 1998 8,882 7,524 (4,310) (5,668) (3,933) (3,933)
</TABLE>
Cash paid for interest for the three months ended September 30, 1999 and
the years ended June 30, 1999, 1998 and 1997 was nil, $2,203,000,
$1,773,000 and $1,327,000 respectively.
U.S. GAAP does not permit the presentation of non-cash items in investing
or financing activities in the statements of cash flows. Under the
Company's current reporting, no such transactions were included in the
statements of cash flows. The Company did, however, convert $60,070,000 in
shareholder advances plus accrued interest to Class A shares as described
in Note 12.
24
<PAGE>
BOGOSO GOLD LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)
20. Generally Accepted Accounting Principles in the United States and Canada
------------------------------------------------------------------------
(Continued)
-----------
US GAAP Tax Considerations
U.S. GAAP changes the Company's method of accounting for income taxes to an
asset and liability approach. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributed to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Use of the assets and liability method has no effect on the U.S.
GAAP financial statements as the Company has concluded that a full
valuation allowance must be applied to the deferred tax assets resulting
from the Company's net operating loss carryforwards. For the three months
ended September 30, 1999 and for the years ended June 30, 1999, 1998 and
1997, the Company has recorded no current tax expense under U.S. GAAP due
to the cumulative net losses incurred by the Company. Under U.S. GAAP, the
Company would not record any deferred tax expense based on the same
rationale.
Summarized below are the components of deferred taxes:
<TABLE>
<CAPTION>
(Unaudited) As of As of
As of September 30, June 30, June 30,
1999 1999 1998
US$'000 US$'000 US$'000
-------- ------- -------
<S> <C> <C> <C>
Temporary differences relating to net liabilities:
Accrued environmental liabilities $ 4,850 $ 4,645 $ 4,237
Tax loss and credit carryforwards 13,259 7,095 10,347
-------- -------- --------
Gross deferred tax asset 18,109 11,740 14,584
Valuation allowance (18,109) (11,740) (14,584)
-------- -------- --------
Net deferred tax assets $ - $ - $ -
======== ======== ========
</TABLE>
The statutory tax rate in Ghana is 35%, while the Company's effective rate
is nil.
Impact of Recently lssued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS
No. 133 requires that all derivative instruments be recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. At this time the
Company has no derivative instruments that are subject to the requirement
of this statement.
25
<PAGE>
(b) Pro-forma financial information
INTRODUCTION
The following unaudited pro forma consolidated statements of operations
give effect to the Golden Star Resources Ltd. ("GSR" or the "Company")
acquisition of Bogoso Gold Limited ("BGL"). The pro forma income
statements were prepared as if the acquisition occurred January 1, 1998.
The pro forma consolidated financial information is presented for
illustrative purposes only and does not purport to represent what the
Company's financial position or results of operations would have been had
the acquisition of BGL in fact occurred on the date indicated or at the
beginning of the period indicated or to project the Company's financial
position or results of operations for any future date or period. The pro
forma information is based on management's best estimates and upon
available information which the Company believes is reasonable under the
circumstances.
There has been no Pro Forma Consolidated Balance Sheet provided due to the
fact that the acquisition was consummated on September 30, 1999. Please
refer to the Company's Quarterly Report on Form 10-Q filed for the third
quarter of 1999 for more information. The purchase price allocation and
the balance sheet acquisition adjustments are included in the notes to
these unaudited pro forma statements.
The following unaudited pro forma consolidated financial information should
be read in conjunction with (i) the audited consolidated financial
statements of the Company and its subsidiaries for the year ended December
31, 1998, which are contained in the Company's 1998 Annual Report on Form
10-K; (ii) the unaudited consolidated financial statements of the Company
and its subsidiaries for the nine months ended September 30, 1999, which
are contained in the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1999; (iii) the audited financial statements of BGL for
the three years ended June 30, 1999, 1998 and 1997, which are included
elsewhere in this Form 8-K/A; and (iv) the unaudited financial statements
of BGL for the three months ended September 30, 1999 and 1998, which are
included elsewhere in this Form 8-K/A.
26
<PAGE>
GOLDEN STAR RESOURCES LTD.
Unaudited Pro Forma Consolidated Statements of Operations
For the Year Ended December 31, 1998
(stated in thousands of United States Dollars except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
For the year ended For the year ended Pro Forma for the
December 31, 1998 December 31, 1998 Pro Forma year ended
GSR BGL Adjustments December 31, 1998
US$'000 US$'000 US$'000 US$'000
---------- --------- ----------- -----------------
<S> <C> <C> <C> <C>
REVENUES
Gold Sales $ - $ 35,432 $ - $ 35,432
Interest and Other 635 227 - 862
-------- -------- -------- --------
635 35,659 - 36,294
COSTS AND EXPENSES
Costs of Goods Sold - 23,130 - 23,130
Royalties - 1,062 - 1,062
Depreciation 230 13,258 (a) (12,581) 907
Amortization - 1,325 (a) (1,325) -
General and Administrative 7,712 10,097 - 17,809
Exploration expense 443 - - 443
Write-offs and Abandonment of
Mineral Properties 16,600 - - 16,600
Interest Expense 36 4,936 (b) (4,936) 1,026
(c) 312
(c) 428
(c) 250
Other Income - (6,419) (b) 6,293 (126)
Foreign Exchange Loss (Gain) 26 236 (b) (236) 26
-------- -------- -------- --------
25,047 47,625 (11,795) 60,877
LOSS BEFORE THE UNDERNOTED (24,412) (11,966) 11,795 (24,583)
Omai Preferred Share Redemption Surplus 950 - - 950
-------- -------- -------- --------
Net Loss before Minority Interest (23,462) (11,966) 11,795 (23,633)
Minority Interest 1,214 - (d) (1,231) (17)
-------- -------- -------- --------
Net Loss $(22,248) $(11,966) $ 10,564 $(23,616)
======== ======== ======== ========
Basic and Fully Diluted Net Loss Per
Share $ (0.74) $ - $ - $ (0.64)
======== ======== ======== ========
Weighted Average Shares Outstanding (in
millions of shares) 30.2 - 6.9 37.1
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
consolidated statements of operations.
27
<PAGE>
GOLDEN STAR RESOURCES LTD.
Unaudited Pro Forma Consolidated Statements of Operations
For the Nine Months Ended September 30, 1999
(stated in thousands of United States Dollars except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
For the nine For the nine Pro Forma for the
months ended months ended nine months ended
September 30, 1999 September 30, 1999 Pro Forma September 30,
GSR BGL Adjustments 1999
US$'000 US$'000 US$'000 US$'000
-------- --------- ----------- --------
<S> <C> <C> <C> <C>
REVENUES
Gold Sales $ - $26,954 $ - $ 26,954
Interest and Other 287 723 - 1,010
-------- ------- ------- --------
287 27,677 - 27,964
COSTS AND EXPENSES
Costs of Goods Sold - 18,146 - 18,146
Royalties - 813 - 813
Depreciation 115 7,264 (a) (6,697) 682
Amortization - 964 (a) (964) -
General and Administrative 2,358 1,480 - 3,838
Exploration Expense 129 - - 129
Write-offs and Abandonment of
Mineral Properties 23,745 - - 23,745
Interest Expense 49 1,739 (b) (1,739) 605
(c) 234
(c) 250
(c) 72
Other Income - (318) - (318)
Foreign Exchange Loss (Gain) (18) (648) (b) 648 (18)
-------- ------- ------- --------
26,378 29,440 (8,196) 47,622
LOSS BEFORE THE UNDERNOTED (26,091) (1,763) 8,196 (19,658)
Omai Preferred Share Redemption Surplus 379 - - 379
-------- ------- ------- --------
Net Loss before Minority Interest (25,712) (1,763) 8,196 (19,279)
Minority Interest Loss 1,056 - (d) (1,110) (54)
-------- ------- ------- --------
Net Loss $(24,656) $(1,763) $ 7,086 $(19,225)
======== ======= ======= ========
Basic and Fully Diluted Net Loss per
Share $ (0.79) - - $ (0.52)
======== ======= ======= ========
Weighted Average Shares Outstanding
(in millions of shares) 31.4 - 5.4 36.8
======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
consolidated statements of operations.
28
<PAGE>
1. Purchase Price Allocation
The purchase price for the Acquisition was an initial payment by us of $6.5
million, of which $5,056,000 was for our account and $1,444,000 was for the
account of Anvil. The Purchase Agreement also called for a payment to the
sellers based upon the average spot price of gold in the two years
subsequent to closing (the "Calculation Period "). The payment will be
calculated on a pro-rata basis if the average p.m. gold price fixing
by the London Bullion Market Association over the Calculation Period (the
"Average Gold Price") is between $255 and $310 per ounce and will be
capped at $10.0 million. If we acquire additional mineable ore reserves
that can be processed at the Bogoso facility equivalent to at least 50,000
ounces of gold output, we will make a minimum payment of $2.0 million one
and half years after the closing of the Bogoso Purchase transaction. This
payment will be applied towards the $10.0 million cap mentioned above. The
Company will record these payments at their fair value at the date they are
determinable. These amounts will be amortized over the remaining life of
the mine. Under an agreement with Anvil, our Company provided all of the
funds for the initial $6.5 million purchase price and all other acquisition
costs collectively (the "Acquisition Costs"). The Company provided a loan
to Anvil (the "Note Receivable") to fund Anvil's share of the Acquisition
Costs. The Note Receivable bears an annual interest rate of 15% compounded
monthly. All cash distributions from the Bogoso Property will be paid to us
until we have received all of the Acquisition Costs plus interest thereon.
Assets and liabilities assumed have been recorded at estimated fair market
value. In addition, $6.0 million of cash acquired has been reflected as
restricted cash to pay for the assumed mine site rehabilitation at the
eventual closure of the Bogoso Property.
The Company and Anvil will also be required to pay the sellers an
additional $5,000,000 on the first anniversary of commencement of sulfide
production at BGL. Due to the uncertain nature of this contingent
consideration, no liability has been recorded as part of the purchase price
allocation. This payment, if made, will be amortized over the remaining
life of the mine. It is believed that this payment can be funded from BGL
cash flow.
29
<PAGE>
The following allocation of the purchase price reflects the estimated fair
market values of all the assets and all the liabilities acquired in the
transaction completed on September 30, 1999. This allocation represents
the entire transaction, related costs and acquired assets and liabilities.
As a result of the transaction, the sellers of BGL assigned all debts owed
them by BGL to the new owners, Golden Star and Anvil. This assigned debt
becomes intercompany debt, which is eliminated through consolidation, and
thus does not appear on the purchase price allocation of the Company.
<TABLE>
<S> <C>
US$'000
-------
Cost of Acquisition
Purchase price $ 6,500
Total 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 properties 3,151
Deferred financing costs 500
Accounts payable (4,362)
Environmental rehabilitation provision (7,000)
Minority interest (2,166)
-------
Total purchase price allocated $ 7,004
=======
</TABLE>
2. The accompanying Pro Forma Consolidated Statements of Operations assume
that the proposed acquisition of BGL had occurred on January 1, 1998.
The acquisition adjustments are as follows:
a. To record the elimination of depreciation and amortization expense on
mining assets acquired as of January 1, 1998.
b. To record the elimination of interest expense and foreign exchange
gains/losses and forgiveness of debt included as other income related
to the debt of BGL.
c. To record the estimated interest expense related to debt incurred of
$4,155,000 at 7.5% as part of the funding for the acquisition of BGL,
to record the accrual of deemed interest expense for the $250,000
production bonus accrual payable under the credit facility and to
record the amortisation of $500,000 in financing costs under the
credit facility.
d. To record the 30% minority interest share in the earnings of BGL.
30
<PAGE>
The Acquisition Agreement noted that the Company and Anvil would provide
for the following: $6 million related to environmental rehabilitation, $3
million related to severance costs, and $1 million related to social and
economic programs. Prior to the consummation of the acquisition, BGL paid
the severance of $3.0 million. Thus, as at September 30, 1999, the
liabilities that were assumed by the Company, and thus included in the
purchase price allocation were $6.0 million for environmental
rehabilitation and $1.0 million for social and economic programs.
3. Reconciliation of Pro Forma Consolidated Statements of Operations to United
States GAAP
The Pro Forma Consolidated Financial Statements have been prepared using
the financial statements of GSR which are in accordance with Canadian
generally accepted accounting principles ("GAAP") which differ in certain
respects from those principles that the Company would have followed had its
financial statements been prepared in accordance with generally accepted
accounting principles in the United States ("U.S. GAAP"). Differences which
materially affect these Pro Forma Consolidated Financial Statements are:
a. For U.S. GAAP, exploration and general and administrative costs
related to projects are charged to expense as incurred. As such, the
majority of costs charged to Exploration Expense and Abandonment of
Mineral Properties under 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. For the Pro Forma
Consolidated Statements of Operations the impact of this adjustment
would be $4.9 million for the year ended December 31, 1998 and $13.8
million for the three months ended September 30, 1999.
b. 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. For the Pro Forma
Consolidated Statements of Operations, the impact of this adjustment
would be $0.8 million for the year ended December 31, 1998 and $0.3
million for the three months ended September 30, 1999.
31
<PAGE>
The following table summarizes the effect of the above material adjustments
on the Pro Forma Financial Statements:
<TABLE>
<CAPTION>
Pro Forma Canadian Pro Forma U.S.
------------------ --------------
GAAP GAAP
---- ----
U.S.$'000 U.S.$'000
<S> <C> <C>
For the Year Ended December 31, 1998
- ------------------------------------
Net (Loss)/Income $ (23,616) $ (16,763)
For the Three Months Ended September 30, 1999
- ---------------------------------------------
Net (Loss)/Income $ (19,225) $ (4,823)
</TABLE>
32
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-33237) dated October 2, 1997 of Golden Star
Resources Ltd. of our report dated December 14, 1999, relating to the financial
statements of Bogoso Gold Limited, which appears in the Current Report on Form
8-K/A of Golden Star Resources Ltd. dated December 14, 1999.
PricewaterhouseCoopers
Chartered Accountants
Accra, Ghana
December 14, 1999
