<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A-3
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 1-12284 98-0101955
(State or other Jurisdiction of Commission file number (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
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)
Not applicable
-------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
===============================================================================
1
<PAGE>
Item 7. Financial Statements & Exhibits
-------------------------------
Set forth below is the information required by Item 7(a), Financial
Statements of Acquired Businesses, and by Item 7(b),Pro Forma Financial
Information, of Form 8-K with respect to the Acquisition by Golden Star
Resources Ltd. ("Golden Star" or the "Company") of Bogoso Gold Limited
("BGL") as disclosed on the Form 8-K filed with the Securities and
Exchange Commission on October 14, 1999.
(a) Financial Statements of Business Acquired
Index to Historical BGL Financial Statements
1. Auditors' Opinion.......................................................3
2. Balance Sheet as of September 30, 1999
and June 30, 1998 and 1997..........................................4
3. Statements of Income and Expenditure for the
three months ended September 30, 1999 and 1998
and for the years ended June 30, 1999, 1998 and 1997................5
4. Statements of Accumulated Deficit for the
three months ended September 30, 1999
and for the years ended June 30, 1999, 1998 and 1997................6
5. Statements of Cash Flow for the three months
ended September 30, 1999 and 1998 and for the
years ended June 30, 1999, 1998 and 1997............................7
6. Notes to the Financial Statements....................................8-26
2
<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, 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 audit in accordance with International Standards on Auditing
and auditing standards generally accepted in the United States, which require
that we plan and perform the audit 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 judgements made by the directors,
and an evaluation of the overall adequacy of the presentation of the financial
statements.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary for the purposes of our audit. We
believe that our audit provides us with a reasonable basis for our opinion.
Without qualifying our opinion, 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 then ended June 30, 1999 in conformity
with International Accounting Standards and comply with the Ghana Companies Code
1963, (Act 179).
/s/ PricewaterhouseCoopers
Chartered Accountants
Accra, Ghana
DECEMBER 14, 1999
3
<PAGE>
BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) June 30, June 30,
September 30, 1999 1999 1998
Note US$'000 US $'000 US $'000
------- -------- --------
<S> <C> <C> <C> <C>
Fixed Assets 3 21,874 23,093 27,692
Development expenditure 4 12,942 13,806 18,648
Deferred assets 5 2,945 2,243 973
--------- --------- ---------
37,761 39,142 47,313
--------- --------- ---------
Current assets
Inventories 6 8,383 8,233 6,041
Accounts receivable 7 1,574 1,982 1,396
Cash and short cash
equivalents 8 6,923 10,729 15,901
--------- --------- ---------
16,880 20,944 23,338
--------- --------- ---------
Current liabilities 9 (14,041) (13,552) (11,882)
--------- --------- ---------
Net current assets 2,839 7,392 11,456
Total assets less current
liabilities 40,600 46,534 58,769
--------- --------- ---------
Less:
Long term liabilities 10 (24,625) (24,564) (28,232)
Environmental
rehabilitation
provision 11 (6,991) (10,209) (12,105)
--------- --------- ---------
(31,616) (34,773) (40,337)
--------- --------- ---------
8,984 11,761 18,432
========= ========= =========
Represented by:
Stated capital 12 78,292 78,292 78,292
Accumulated deficit (69,308) (66,531) (59,860)
Shareholders' advances 13 - - -
--------- --------- ---------
8,984 11,761 18,432
========= ========= =========
</TABLE>
Director........................................ Approved by and signed on
behalf of the Board of Directors on...........................1999
Director.......................................
The notes on pages 8 to 26 form an integral part of these financial
statements.
4
<PAGE>
STATEMENTS OF INCOME AND EXPENDITURE
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three months Three months
ended ended Year ended Year ended Year ended
September 30, September 30, June 30, 1999 June 30, 1998 June 30, 1997
Note 1999 1998 US$'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) (4,133) (4,842) (5,856) (2,537)
Other cost of sales (5,251) (6,242) (25,554) (19,286) (18,651)
------ ------ ------- ------- -------
(7,751) (13,168) (38,567) (31,132) (25,295)
Gross operating profit (loss) (951) (4,598) (1,210) 3,664 12,395
General and administrative
expenses (1,529) (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 15 (2,777) (7,382) (6,671) (8,710) (6,689)
Taxation 16 - - - - -
------- ------ ------ ------ ------
Net loss for the year (2,777) (7,382) (6,671) (8,710) (6,689)
======= ====== ======= ======= =======
</TABLE>
The notes on pages 8 to 26 form an integral part of these financial
statements.
5
<PAGE>
STATEMENTS OF ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
(Unaudited)
Three months ended Year ended Year ended Year ended
September 30, 1999 June 30, 1999 June 30, 1998 June 30,
US$`000 US$'000 US$'000 1997 US$'000
------- ------- ------- ------------
<S> <C> <C> <C> <C>
Accumulated deficit brought forward (66,531) (59,860) (51,150) (44,461)
Loss for the year 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 8 to 26 form an integral part of these financial
statements.
6
<PAGE>
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three months ended Three months ended
September 30, September 30, Year ended Year ended Year ended
1999 1998 June 30, 1999 June 30, 1998 June 30, 1997
US$'000 US$'000 US$'000 US$'000 US$'000
Note ------- ------- ------- ------- -------
<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 deferred
liabilities - - - - -
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 8 to 26 form an integral part of these financial
statements.
7
<PAGE>
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 licence 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 shareholdings as at June 30, 1998.
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%.
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.
(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.
8
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2. Accounting policies (Continued)
------------------------------
(b) Fixed assets (Continued)
------------------------
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.
(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:
With effect from July 1, 1997, the Company changed its method
of calculating the amortisation charge on its development
expenditure from a unit of production basis to straight line.
In addition, the new method assumes the estimated remaining
economic life of the project to be to June 30, 2003.
(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
9
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2. Accounting policies (Continued)
------------------------------
(f) Foreign currency translation (Continued)
---------------------------------------
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.
(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 equivalents
----------------
Cash at bank, in hand and in short term deposits 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. An agreement for gold purchase and refining has been
agreed with Societe Generale and is pending execution upon
formal termination of the BMT agreement.
(l) Cost of sales
-------------
These are the historical costs of direct production and
production support activities, including related depreciation,
amortisation salaries and wages.
10
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2. Accounting policies (Continued)
------------------------------
(m) General and administrative expenses
-----------------------------------
The administrative expenses include related depreciation, salaries and
wages.
All amounts as of and for the three months ended September 30, 1999 and
1998 are unaudited.
11
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
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$'000
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Cost
At July 1, 1998 9,073 39,240 14,070 4,156 2,899 69,438
----- ------ ------ ----- ------ ------
Additions - - - - 4,124 4,124
Transfers/ disposals/
reclassifications 129 1,306 2,283 451 (5,186) (1,017)
----- ------ ------ ----- ------ ------
At June 30, 1999 9,202 40,546 16,353 4,607 1,837 72,545
----- ------ ------ ----- ------ ------
Additions - - - - 417 417
Transfers/ disposals/
reclassifications 41 199 143 34 (417) -
----- ------ ------ ----- ------ ------
At Sept. 30, 1999 9,243 40,745 16,496 4,641 1,837 72,962
Accumulated Depreciation
At July 1, 1998 5,362 21,034 12,167 3,183 - 41,746
----- ------ ------ ----- ------ ------
Charge for the year 1,665 5,016 1,050 440 - 8,171
Transfers/ disposals - - (465) - - (465)
----- ------ ------ ----- ------ ------
At June 30, 1999 7,027 26,050 12,752 3,623 - 49,452
----- ------ ------ ----- ------ ------
Charge for the period 281 888 334 133 - 1,636
Transfers/ disposals - - - - - -
----- ------ ------ ----- ------ ------
At Sept. 30, 1999 7,308 26,938 13,086 3,756 - 51,088
Net book value
At Sept. 30, 1999 1,935 13,807 3,410 885 1,837 21,874
===== ====== ====== ===== ====== ======
At June 30, 1999 2,175 14,496 3,601 984 1,837 23,093
===== ====== ====== ===== ====== ======
At June 30, 1998 3,711 18,206 1,903 973 2,899 27,692
===== ====== ====== ===== ====== ======
</TABLE>
4. Development expenditure
-----------------------
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30, 1999 June 30, 1998
1999 US$'000 US$'000
---------- ------- -------
<S> <C> <C> <C>
Balance at beginning of period 13,806 18,648 24,430
Expenditure for the period - - 74
Less: Amortisation during the
period (See Note 2(c)) (864) (4,842) (5,856)
----- ------ ------
Balance at end of period 12,942 13,806 18,648
====== ====== ======
</TABLE>
12
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
5. Deferred assets
---------------
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
US$'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$'000
------- ------- -------
Sundry receivables 1,426 1,561 914
Employee advances 27 217 186
Prepaid expenses 121 204 296
----- ----- -----
1,574 1,982 1,396
===== ===== =====
8. Cash and short term deposits
----------------------------
Balance held within Ghana (40) (592) 320
Balances held externally 6,963 11,321 15,581
----- ------ ------
6,923 10,729 15,901
===== ====== ======
13
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
9. Current liabilities
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30, June 30,
Note 1999 1999 1998
US$'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
Amounts owed to group
companies - - -
Accruals and other payables 22 2,580 3,098 2,387
------ ------ ------
14,041 13,552 11,882
====== ====== ======
(a) Long-term liabilities -
current portion
International Finance
Corporation 10 3,725 3,725 2,937
Deutsche Investitions und
Entwicklungsgesellschaft
GmbH 10 1,206 1,189 1,019
Consortium of Banks (ex New
Billiton loan) 10 - - -
------ ------ ------
(b) Loan interest payable 4,931 4,914 3,956
====== ====== ======
International Finance
Corporation 3,605 3,180 3,024
Deutsche Investitions und
Entwicklungsgesellschaft
GmbH 1,143 997 1,025
Consortium of Banks (ex
New Billiton loan) - - -
------ ------ ------
4,748 4,177 4,049
====== ====== ======
</TABLE>
14
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
10. Long term liabilities
<TABLE>
<CAPTION>
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 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 10(d)
advances - - -
------ ------ -------
24,625 24,564 22,903
====== ====== =======
</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
15
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
10. Long term liabilities (Continued)
--------------------------------
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
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 1997 but not in April 1998 for the
year ended June 30, 1998 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$13.1 million at June
30, 1998) 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 1997 but not in April 1998 for the year ended
June 30, 1998 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.
16
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
10. Long term liabilities (Continued)
--------------------------------
(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 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$1 per milled ton
of ore
12. Stated capital
--------------
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
No. of shares No. of shares No. of shares
------------- ------------- -------------
Authorised shares
-----------------
<S> <C> <C> <C>
Class A shares 18,000,000 18,000,000 18,000,000
Class B shares 2,000,000 2,000,000 2,000,000
---------- ---------- ----------
20,000,000 20,000,000 20,000,000
========== ========== ==========
</TABLE>
17
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
12. Stated capital (Continued)
-------------------------
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30, June 30,
1999 1999 1998
---- ---- ----
No. of Amount No. of Amount No. of Amount
Issued: shares US$'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.
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, 1998
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 704,639 - -
------- ------- -------
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>
18
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
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$5,329,000
will not accrue any further interest on the remaining principal from June
30, 1999.
14. Net loss before taxation is stated after charging/(crediting)
-------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, 1999 June 30, 1999 June 30,1998
US$'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
Roaster write-off - - -
Rehabilitation expenditure 338 1,352 2,125
==== ====== =====
</TABLE>
15. Taxation
--------
The Company has no taxation charge for the nine months ended September 30,
1999 or the years ended June 30, 1999 or 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.
19
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
17. Contingent liabilities (Continued)
----------------------------------
(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.
18. Going concern and subsequent events
-----------------------------------
The Company has accumulated losses of $66,531,000 as at June 30, 1999
due to trading losses over the past years as a result of the high cost of
servicing a heavy debt portfolio and the declining gold price, as well as
working capital problems with the non-payment of external debt and limited
finance available for an on-going capital renewal program. The Company has
been deferring payments due on long-term loans.
A major exploration program has been undertaken to identify proven and
probable oxide reserves to extend the life of the mine. In addition, the
exploration work has identified highly prospective targets and
investigations are underway into alternative sources of ore such as the
treatment of tailings.
As discussed in Note 1, effective September 30, 1999 the consortium of nine
banks sold their shares and assigned their debts owed them by the Company
to new shareholders, Golden Star Resources Ltd. and Anvil Mining NL.
19. Net cash inflow from operating activities
-----------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Three months ended Year ended Year ended
September 30, 1999 June 30, 1999 June 30, 1998
US$'000 US$'000 US$'000
------- ------- -------
<S> <C> <C> <C>
Net operating (loss)/profit before
interest expense (2,205) (4,241) (1,597)
Depreciation 1,636 8,171 5,990
Amortisation of development
expenditure 864 4,842 5,856
Amortisation of deferred assets 416 3,886 3,864
(Increase)/decrease in inventories (150) (2,192) 3,291
(Increase)/decrease in accounts
receivable 407 (586) (371)
(Decrease)/increase in creditors (99) 584 (519)
(Decrease)/increase in long term
liabilities (3,140) (1,896) (735)
Loan and interest waiver - - (6,293)
Exchange (gain)/loss on loans - (99) (205)
Loss/(profit) on disposal of assets - (14) 16
Interest income (136) (631) (415)
Reclassification of fixed assets - 539 -
------ ----- -----
(2,407) 8,363 8,882
====== ===== =====
</TABLE>
20
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
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 Ghana Companies Code
1963 (Act 179), in the United Kingdom 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. The Company has
certain loans denominated in deutschmarks.
(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. 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 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
21
<PAGE>
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.
22
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (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:
Statement 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 income (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>
23
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (Continued)
22. 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 GAPP GAAP As presented GAAP GAAP
------------ ---- ---- ------------ ---- ----
<S> <C> <C> <C> <C> <C> <C>
Fixed assets 21,874 22,768 22,768 23,093 23,873 23,873
Development 13,806 19,805 16,944
expenditure (b) 12,942 19,081 15,885
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
------------ ---- ----
<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
---- ---- ----
<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>
24
<PAGE>
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
Class A Class B Stated Comprehensive Shareholder Shareholders'
Shares Shares Capital Deficit Income Advances Equity
------ ------ ------- ------- -------------- ---------- ---------
<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 Flow Under U.S. GAAP
<TABLE>
<CAPTION>
Net Cash Provided by (Used in): Operating Activities Investing Activities Financing Activities
-------------------- -------------------- --------------------
For the three month period ended As presented U.S. GAAP As presented U.S. GAAP As presented U.S. GAAP
--------------------------------- ------------ --------- ------------ --------- ------------ ---------
<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.
25
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (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 as 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
---- ---- ----
<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 issued 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 add, 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.
(b) Pro-forma financial information
INTRODUCTION
The following unaudited pro forma consolidated statements of operations
illustrate Golden Star Resources Ltd.'s ("Golden Star" 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
26
<PAGE>
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 acquisition 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.
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 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.
27
<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 share amounts)
<TABLE>
<CAPTION>
Golden Star
Historical BGL Historical Pro Forma Golden Star
December 31, 1998 December 31, 1998 Adjustments Pro Forma
----------------- ----------------- ----------- ---------
<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) (9,156) 4,332
Amortization - 1,325 (a) (1,325) -
General and Administrative 7,712 9,535 - 17,247
Exploration expense 443 - - 443
Write-offs and Abandonment of
Mineral Properties 16,600 - - 16,600
Interest Expense 36 4,936 (b) (4,936) 348
(c) 312
Other Income - (6,419) 6,293 (126)
Foreign Exchange Loss (Gain) 26 236 (b) (236) 26
-------- -------- ------- --------
25,047 47,063 (9,048) 63,062
LOSS BEFORE THE UNDERNOTED (24,412) (11,404) 9,048 (26,768)
Omai Preferred Share Redemptions
Surplus 950 - - 950
-------- -------- ------- --------
Net Loss Before Minority Interest (23,462) (11,404) 9,048 (25,818)
Minority Interest 1,214 - (d) (1,612) (398)
-------- ------- ------- ---------
Net Loss $(22,248) $(11,404) $ 7,436 $(26,216)
======== ======== ======= ========
Basic and Fully Diluted Net Loss Per
Share $ (0.74) $ - $ (0.71)
======== ========
Weighted Average Shares Outstanding
(in millions of shares) 30.2 - 6.9 37.1
</TABLE>
28
<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 share amounts)
<TABLE>
<CAPTION>
Golden Star
Historical BGL Historical
September 30, September 30, Pro Forma Golden Star
1999 1999 Adjustments Pro Forma
---- ---- ----------- ---------
<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) (3,989) 3,390
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) 283
234 -
Other Income - (318) - (318)
Foreign Exchange Loss (Gain) (18) (648) (b) 648 (18)
-------- ------- ------- --------
26,378 29,440 (5,810) 50,008
LOSS BEFORE THE UNDERNOTED (26,091) (1,763) 5,810 (22,044)
Omai Preferred Share Redemptions Surplus 379 - - 379
--------- ------- ------- --------
Net Loss Before Minority Interest (25,712) (1,763) 5,810 (21,665)
Minority Interest Loss 1,056 - (d) (986) 70
-------- ------- ------- --------
Net Loss $(24,656) $(1,763) $ 4,824 $(21,595)
======== ======= ======= ========
Basic and Fully Diluted Net Loss Per Share $ (0.79) $ (0.59)
======== =========
Weighted Average Shares Outstanding (in
millions of shares) 31.4 - 31.4
</TABLE>
29
<PAGE>
Purchase Price Allocation
The purchase price for the Acquisition was an initial payment by us of US$6.5
million, of which US$5,056,000 was for our account and US$1,444,000 was for the
account of Anvil. The Purchase Agreement also calls for a payment to the sellers
based upon the average price 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 afternoon gold price fixing by the London Bullion
Market Association over the Calculation Period (the "Average Gold Price") is
between US$255 and US$310 per ounce and will be capped at US$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 US$2.0 million one and half years after the closing of the
Bogoso Purchase transaction. This payment will be applied towards the US$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
will provide all of the funds for the initial US$6.5 million purchase price and
all other acquisition costs collectively (the "Acquisition Costs"). We will
provide a loan to Anvil (the "Note Receivable") to fund Anvil's share of the
Acquisition Costs. The Note Receivable will bear 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, US$6,000,000 of cash acquired has been reflected as
restricted cash to pay for the assumed mine site rehabilitation and economic and
social development for the mine area community at the eventual closure of the
Bogoso Property.
The Company will also be required to pay the sellers an additional US$5,000,000
on the first anniversary of commencement of sulfide production at BGL. Due to
the uncertain nature of this contingent consideration, no liability has been
recorded as part of the purchase price allocation. This payment, if made, will
be amortized over the remaining life of the mine.
30
<PAGE>
The following allocation of the purchase price reflects the estimated fair
market values of all the assets and all the liabilities acquired in the
transaction completed on September 30, 1999. This allocation represents
the entire transaction, related costs and acquired assets and liabilities.
<TABLE>
<CAPTION>
Cost of Acquisition US$'000
<S> <C>
Purchase Price $ 6,500
Transaction Costs 1,948
Cost of Acquisition $ 8,448
========
Allocation of Purchase Price
Cash $ 6,923
Accounts receivable 1,453
Inventories 8,383
Other current assets 122
Mining properties 3,774
Accounts Payable (4,362)
Long-Term Liabilities (7,000)
Minority Interest (845)
--------
Total Purchase Price Allocated $ 8,448
========
</TABLE>
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
US$4,155,000 at 7.5% as part of the funding for the acquisition of
BGL.
d. To record the 30% minority interest share in the earnings of BGL.
The Acquisition Agreement noted that the Company and Anvil would provide for the
following: US$6 million related to environmental rehabilitation, US$3 million
related to severance costs, and US$1 million related to social and economic
programs. Prior to the consummation of the acquisition, BGL paid the severance
of US$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
US$6.0 million for environmental rehabilitation and US$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 ("Canadian 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
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<PAGE>
principles in the United States ("US GAAP"). Differences which materially
affect these Pro Forma Consolidated Financial Statements are:
a. For US 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 US
GAAP. Property acquisition costs are capitalized for both Canadian and US
GAAP. For the Pro Forma Consolidated Statements of Operations the impact of
this adjustment would be US$4.9 million for the year ended December 31,
1998 and US$13.8 million for the nine months ended September 30, 1999.
b. Under US 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 US$0.8 million for the year ended
December 31, 1998 and US$0.3 million for the nine months ended September
30, 1999.
The following table summarizes the effect of the above material adjustments on
the Pro Forma Financial Statements:
<TABLE>
<CAPTION>
Pro Forma Canadian Pro Forma US
GAAP GAAP
US $'000 US $'000
-------- --------
<S> <C> <C>
For the Year Ended December 31, 1998
------------------------------------
Net (Loss)/Income $(26,216) $(20,237)
For the Nine Months Ended September 30, 1999
--------------------------------------------
Net (Loss)/Income $(21,595) $(6,820)
</TABLE>
Sub events Rider
SUBSEQUENT EVENTS (Unaudited)
On September 30, 1999, the Company was purchased by Bogoso Holdings, a
wholly-owned subsidiary of Golden Star Resources Ltd. ("Golden Star"), and Anvil
Mining NL ("Anvil"). Golden Star and Anvil acquired of 70% and 20%,
respectively, of the common shares of BGL. The Government of Ghana retained its
remaining 10% equity interest in BGL. The acquisition also included the
assignment of US$34 million of existing indebtedness owed to the previous owners
of BGL. The debt was assigned 78% to Bogoso Holdings and 22% to Anvil.
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, 1998 of Golden Star
Resources Ltd. of our report dated December 14, 1999, relating to the financial
statement of Bogoso Gold Limited, which appears in the Current Report on Forma
8-K/A of Golden Star Resources Ltd. dated December 14, 1999.
32
<PAGE>
/s/ PricewaterhouseCoopers
Chartered Accountants
Accra, Ghana
December 14, 1999
Proforma Rider
f. The transaction as detailed elsewhere in this Form 8-K, detailed the
assignment of US$34 million of existing BGL indebtedness to the Company and
Anvil. Due to the intricate structure of the acquisition, the debt was
assigned to Bogoso Holdings, a wholly-owned subsidiary of the Company.
Thus, through the consolidation process of BGL and Bogoso Holdings the
assigned debt becomes intercompany debt and thus does not appear on the
purchase price allocation of Company.
Note: As previously disclosed in the Prospectus Supplement dated August 16,
1999, the Company detailed that as of March 31, 1999, BGL had approximately
US$12.9 million in long-term debt beyond the debt owed to the previous owners.
The Acquisition Agreement, referred to in the above document, noted that the
Company and Anvil would acquire US$34 million in debt , owed to the owners, and
also provide for the following: US$6 million related to environmental
rehabilitation, US$3 million related to severance costs, and US$1 million
related to social and economic programs. Prior to the consummation of the
acquisition, BGL paid the severance of US$3 million. Thus, as at September 30,
1999, the liabilities that were assumed by the Company, and thus included in the
purchase price allocation were US$6 million for environmental rehabilitation and
US$1 million for social economic programs.
33
<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
34
