p. 1

golden star 2 0 0 7 sustainabilityreport our health safety environmental and community performance for 2007

[close]

p. 2

highlights in 2007 · goldenstarenvironmental,communityrelationsandhumanrights,andhealthandsafetypolicies updatedtoreflecttheunglobalcompactprinciples · wassaminereceivedenvironmentalandforestrypermitsforthehwini-butrebensoproject · goldenstardevelopmentfoundationbeganfundingofprojectsselectedbystakeholdercommunities · goldenstaroilpalmplantationsgsoppexpandedtoincludethewassamineareaaswellasan increasedareaatbogoso/prestea · areviewofgsoppindicatedthatsomepracticesforobtaininglandmightresultinpeoplebeingdeprivedof accesstolandforfoodcropping.anewsetofprocedureswasestablishedclearlyoutlininglandacquisition toensurecontinuityofaccessbystakeholderstofarmareas · improvementinsafetyatbothminesitesresultedinlosttimeinjuryltifreehoursworkedofover4million forbogoso/presteaandover3millionforwassa · during2007,thelosttimeinjuriesexperiencedbythegrouptotaled15,downfrom19in2006 theyear-endlosttimeinjuryfrequencyrateltifr whichisameasureofinjuriespermillionhoursworked wereasfollows:bogoso/prestea0.63;exploration11.11;andwassa0.92 · over8,000bookswereplacedinlibrariesandschoolswithingoldenstar ssphereofoperations table of contents 1 3 president s message who we are and what we do ourpeople employment training 7 8 11 13 our operations bogoso/prestea wassa unglobalcompact ourhealthandsafetyperformance ourcommunityengagement andsupport dumase 16 19 20 our environment wassa bogoso/prestea icmc ourperformanceonhumanrights ourperformanceonlaborstandards womeninmining anticorruption report preparation thisreportpresentsasummaryofgoldenstarresources social,environmentalandeconomiccontributionsforthe2007calendaryear.alldatarelatesto theperiodfromjanuary1,2007todecember31,2007,unlessstatedotherwise.allamountsinthisreportareinusdollarsunlessotherwiseindicated forward-looking statements theforward-lookingstatementsmadeinthisreportarebasedonassumptionsandjudgmentsofmanagementregardingfutureeventsandresults suchforward-lookingstatements,includingbutnotlimitedtothosewithrespecttoreserveandresourceestimates,costandtimingofthedevelopment ofnewdeposits,timingandamountofestimatedfutureproduction,estimatedcostsoffutureproduction,operationalcapabilities,andgoldprice involveknownandunknownrisks,uncertainties,andotherfactorswhichmaycausetheactualresults,performanceorachievementsofthe companytobemateriallydifferentfromforecastfutureresults,performanceorachievementsexpressedorimpliedbysuchforward-looking statements.suchfactorsinclude,amongothers,theactualpriceofgold,theactualresultsofcurrentexploration,developmentandminingactivities andchangesinprojectparametersasplanscontinuetobeevaluated,aswellasthosefactorsdisclosedinthecompany sfileddocuments.

[close]

p. 3

2 0 0 7 sustainabilityreport president s message i am pleased to present golden star s second annual sustainability report which provides an overview of our recent sustainability efforts our sustainability report is also the communication of progress in recognition of our continued support of the un global compact 2007 was a year of transformation for golden star with the commissioning of the new sulfide plant at bogoso/prestea the wassa mine continued to operate well and provided steady quarter-on-quarter growth throughout the year prospects for the operation were further enhanced by the board approval and subsequent regulatory permitting of the hbb hwini-butre and benso project construction of the haulage road to the hbb project commenced in the last quarter of 2007 our focus for community relations for 2007 was to improve our interactions with our stakeholder communities by following through on our commitments to development projects various issues impeding the completion of these projects had arisen and needed to be resolved and new commitments implemented in a timely manner to that end projects initiated included the prestea police station barracks extension and the prestea secondary school our work with golden star oil palm plantation continued through the year and we developed an additional 536 hectares of oil palm plantation at wassa and bogoso/prestea in all we planted 31,363 oil palms the golden star development foundation initiated two projects one at wassa where power poles were installed at the akyempim village and the other at bogoso/prestea where construction of an extension to the prestea secondary school was started the total costs for these two project year-end of 2007 were $80,783 and $70,234 respectively during 2007 we continued working toward improved environmental controls and reporting at both project sites we established a full suite of environmental management system procedures that are now being implemented at the sites with a goal of establishing a sound platform for further systematic improvements in our environmental management these improvements to date were reflected in our overall performance and we managed environmental effects such that we only had two reportable environmental incidents during the year these incidents caused minimal environmental damage as they were controlled within the immediate vicinity of the incident and the downstream effects therefore were negligible the sustainability achievements that we made during 2007 were made through substantial efforts of our employees and we would like to thank them for incorporating sustainability into all aspects of our work it is only with the ongoing support of our employees that we are able to achieve continuous improvement in our sustainability management sincerely tom mair president and ceo vision and values tobuildabrandnamegoldmining companythat » deliverssuperiorreturnstoinvestors » attractsandretainsthebesttalent » iscommittedtointernationalbest practicesandconduct;and » isapartnerofchoiceforhost communitiesandgovernments tom mair president and ceo 1

[close]

p. 4

[close]

p. 5

2 0 0 7 sustainabilityreport who we are and what we do g olden star is a mid-tier gold mining company with operating mines along the prolific ashanti gold belt in ghana west africa production in 2007 totaled 246,278 ounces of gold and this is expected to increase significantly in 2008 at the end of 2007 our proven and probable mineral reserves totaled 4.93 million ounces of gold up 18 from 2006 our growth strategy is largely the result of the expansion of our activities at bogoso/prestea our flagship operation we started commercial production of the new bogoso sulfide expansion project in july 2007 and have been working to achieve the design throughput and recovery since that time additional gold production is expected from the wassa operation in 2008 with the initiation of mining the hwini-butre benso deposits we continued our ongoing commitment to ghana through investments at our bogoso/prestea operations and through bogoso/prestea gold room thepouringofgoldintodorébars isthefinalaspectofthegoldmining process.goldenstarhadarecord yearwithproductionofjustunder 250,000ozofgold.weexpectto surpassthisin2008 the approval of the hbb project that will provide additional higher grade feed for the wassa processing plant while developing these projects we have been able to improve the overall skill sets of our workers and provide additional employment opportunities both at the mine sites and through contract and supply opportunities we continue to work with local regional and central governments as we develop our projects we have consulted extensively with regulatory authorities throughout the year to provide an opportunity for their input early in project development our ongoing commitment to stakeholder consultation and best practice environmental standards was demonstrated with the approval of the environmental impact statement for the hbb project we have also been carrying out extensive consultation with the dumase community to negotiate a resettlement agreement initial progress with the dumase community was good but later in 2007 the original community consultation committee was replaced by the new dumase oversight committee doc communications with the doc were initially very slow with only two meetings in first 5 months of their tenure however later in the year progress was made as the committee established communications links with golden star recommendations that socioeconomic and asset surveys be completed to allow the negotiations to start were received from the doc members our people we are dedicated to providing a clean and safe working environment for employees through training programs that ensure our employees are aware of our commitment to zero accidents and workplace safely our investment in our employees through training and our status as a preferred local employer provide long-term benefits to the local and national economies as well as our operations by sharing our vision and values with our workforce we are able to forge a common goal focused on the success of the company through partnership with our stakeholder communities and government employment at the end of 2007 we employed nearly 4,000 contract and full-time employees our workforce is spread across our business units from exploration to production and administration our employees are divided primarily between the bogoso/prestea and the wassa mines several exploration locations around ghana and west africa and corporate support from accra and denver the increase in our workforce from 2006 to 2007 reflects the maturing of the bogoso sulfide processing plant as well as our ongoing efforts to optimize our workforce in addition to the direct golden star employees wassa and bogoso/prestea employed 616 and 1,298 contractors at the end of december 2007 respectively 3

[close]

p. 6

g oldenstar we continue to implement our local hiring policy this includes providing transparent access for people from our stakeholder communities to available positions within the corporation in ghana several modifications were implemented to the selection process in 2007 primarily to address the local residency requirement and to provide applicants and local communities with an avenue to dispute residency our current local hiring procedure is now fully transparent and allows applicants and communities alike to be assured that the applications from all stakeholder communities are treated fairly by golden star bogoso prestea wassa table of full-time employees national 1,107 628 57 7 16 1,815 expatriate 31 14 3 0 n/a 48 training contributing to the long-term success of the local and national economy is one of our lasting legacies in ghana our training and development programs along with the experience that people gain on-the-job continue to contribute to the local economy throughout and beyond employment with golden star it is through our training programs that we are able to validate our claim that mining done exploration accra denver corporate usa totals properly contributes to the local and national economy as we continue to mine surface ores by open pit mining methods operate both oxide and refractory sulfide processing plants and develop the prestea underground mine our employees gain on-the-job training in a wider range of fields within the mining industry than is available at almost any other site worldwide our training efforts during 2007 extended beyond our direct and contract workforce into our catchment communities to provide training that benefits both golden star and our stakeholder communities as part of the international cyanide management code icmc implementation we provided stakeholder communities 86 people with training in emergency response to any potential cyanide transportation incidents internally we trained 165 people employees and third party contractors on emergency response to cyanide incidents including the symptoms of cyanide exposure health effects of cyanide and first aid procedures associated with cyanide poisoning our support of development in ghana through training at the bogoso/prestea operations included apprenticeships 10 female operator training 9 industrial attachments for graduates 68 and support for the national service program 50 our ongoing support for our employees includes sponsorship for postgraduate degrees and professional courses 15 training of our employees at the anglogold ashanti engineering training centre 55 and defensive driving and road safety management 107 these programs are in addition to our normal supervisory skills training and attendance at seminars and workshops first aid training is provided to both our employees and 10 members of catchment communities we carried out extensive off-site and on-site training for our wassa employees in a variety of areas including safety management 5 first aid 7 blasting 5 cyanide management 9 and supervisory training 1 in addition to the apprenticeship program which is ongoing nine employees are currently being sponsored for distance learning on programs ranging from accounting to studying for an mba as is required for the implementation of the icmc response training was provided to key members of local communities along the transport route from the cyanide distribution centre in tarkwa to the wassa mine site 4

[close]

p. 7

[close]

p. 8

[close]

p. 9

2 0 0 7 sustainabilityreport our operations bogoso/prestea property n ghana bogoso prestea 85 km corporate management team as we transitioned from the construction of the bogoso ashanti trend t he focus of our operations is in ghana west africa where we have two operating mines that are the bogoso/prestea and wassa mines in 2007 we strengthened our mampon sulfide processing plant through to commercial production at wassa where a record production year was posted the focus was on obtaining the required permits to develop the hwini-butre and benso project we continued our efforts to add value to the company with an extensive exploration program in west africa and south america bogoso/prestea pampe bogoso north chujah-dumasi bogoso processing plants buesichem plant north bogoso prestea prestea south the bogoso/prestea mine consists of a series of open pits with two processing plants and an underground mine located in prestea with the commissioning of the sulfide processing plant the focus at bogoso/prestea has been on optimization the oxide processing facility was modified to allow it to receive either oxide or sulfide ores on a campaign basis the oxide ©2008 googletm product from the mills are fed directly to the carbon-in-leach cil tanks and sulfide material from the mills is sent to the flotation section to produce a concentrate for the biox® section of the sulfide processing plant some of our open pits are a distance from the bogoso processing facility therefore we use ourbogoso/presteaoperationisina traditionalminingareanorthwestof tarkwa,inghana swesternregion mininghasbeengoingoninthearea sincethelate1800 s active pits bogoso properties prestea properties exploration properties contractors with road haulage fleets to transport ore from these pits to the bogoso processing facility the bogoso/prestea mining department works closely with the haulage contractors to ensure that our safety and environmental policies are implemented in 2007 2006 and 2005 the royalty rate for bogoso/prestea was 3 of revenues therefore royalties of $2.6 million $1.9 million and $1.8 million respectively were paid to the government of ghana wassa hwini-butre benso properties n wassa father brown ghana wassa hwini-butre benso during 2008 our wassa operation focused on the development of the sak pits while optimizing adoikrom hwini-butre 36 km production from the original hard-rock pits through careful management of the tailings disposal facility access was maintained to the original heap leach scats so that we could maintain tonnages moved to the processing plant we completed work to remove some of the bottlenecks within the processing plant and maintain high throughput rates which resulted in record months of gold production and a record year for the wassa operation with a total output of 126,062 oz in 2007 which was up from the 97,614 ounces we produced in 2006 key among the development issues for the wassa mine was permitting the hbb project to provide high grade ore to the wassa processing plant in 2008 the appropriate environmental and forestry permits were obtained and construction on the 50 kilometer access road to benso began in late 2007 the incorporation of the hbb project into the wassa mine plan plans i zone subriso east subriso west g zone benso hbb haul road wassa mine processing plant ©2008 googletm extends the life of the mine by several years and increases gold production with the beneficial effects on cashflow and profitability wassa has a 3 royalty rate on revenues and paid $2.7 million $1.5 million and $0.9 million in 2007 2006 and 2005 respectively to the government of ghana the mining methods that we use at the wassa mine are similar to those used at bogoso/prestea ourwassamineemploysover500 peopleinghana swesternregion locatedinaruralarea,weprovide employmentmainlyforlocalpeople diversifyingtheeconomicbasefromits historicalsubsistenceagriculturebase active pits deposits wassa properties exploration properties hwini-butre benso properties 7

[close]

p. 10

g oldenstar un global compact t he un global compact is a framework for organizations that are committed to aligning their operations and strategies with ten universally principle 8 undertake initiatives to promote greater environmental responsibility and principle 9 encourage the development and diffusion of environmentally friendly technologies accepted principles in the areas of human rights labor the environment and anti-corruption as the world s largest global corporate citizenship initiative the global compact is first and foremost concerned with exhibiting and building the social legitimacy of business and markets the global compact is a purely voluntary initiative with two objectives » mainstream the ten principles in business activities around the world » catalyze actions in support of broader un goals such as the millennium development goals golden star resources supports the global compact and we are continuing our efforts to integrate the ten principles into our business activities anti-corruption principle 10 businesses should work against corruption in all its forms including extortion and bribery sustainability indicators based on the global compact principles we continue the evolution of sustainability indicators our aim for continuous improvement in our sustainability performance is in keeping with international best practices and allows us to measure our performance year on year following the submission of first communication on progress to the u n global compact and incorporating comments received we have included our expected performance/outcomes for 2008 the following revised sustainability indicators incorporate the global compact principles while allowing a broader approach to sustainability in our business practices » health and safety performance » community engagement and support » environmental management » performance on human rights » performance on labor standards » anti-corruption activity we review our sustainability performance against the mining association of canada mac http www.mining.ca sustainability indicator levels as follows 1 no action taken activities reactive no systems in place 2 some actions but sporadic and not fully documented systems/processes planned and being developed 3 systems processes developed and implemented with review and feedback 4 integration into management decisions and business functions 5 excellence and leadership human rights principle 1 businesses should support and respect the protection of internationally proclaimed human rights and principle 2 make sure that they are not complicit in human rights abuses labour standards principle 3 businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining principle 4 the elimination of all forms of forced and compulsory labour principle 5 the effective abolition of child labour and principle 6 the elimination of discrimination in respect of employment and occupation environment principle 7 businesses should support a precautionary approach to environmental challenges 8

[close]

p. 11

[close]

p. 12

[close]

p. 13

2 0 0 7 sustainabilityreport our health safety performance d clinic attendance per employee 1.00 0.90 0.80 0.70 0.60 0.50 0.40 uring 2007 there were 15 lost time injuries ltis across the group a 29 reduction from the 21 ltis during 2006 the distribution of the ltis for 2007 was bogoso/prestea 5 wassa 3 exploration 6 and bogoso sulfide processing plant 1 overall the assessment of the health and safety performance according to the mac criteria was 2.5 to 3.0 the aim for 2008 is to achieve a level 3 according to the mac sustainability indicator levels with the ongoing transition at bogoso/prestea from the construction of the bsep project to a producing processing plant our safety programs focused on improving the overall safety awareness of our workers and to transition them safely from construction to operations additionally at wassa we had to ensure that our safety programs were updated to address the construction of the hbb access haul road within the group our bogoso prestea underground and our corporate office in denver had lost time injury frequency rates ltifr of zero at year-end bogoso/prestea and wassa had ltifr s <1 which was an improvement in performance at bogoso/prestea over 2006 year-end ltifr was 1.27 however at our wassa operation this was a decrease in safety performance as the end of 2006 ltifr was zero our exploration department continued to have a high frequency of ltis relative to the number of people employed and completed the year with an ltifr of 11.11 our health indicators were varied throughout the year clinic attendance for bogoso/prestea remained constant while wassa showed a slight increase however the malaria incidence per employee dropped at both sites in september 2007 wassa hosted the 2007 zone one first aid and mine safety day wassa came third after abosso goldfields limited and tarkwa goldfields limited of more concern during 2007 was the number of incidents that occurred at the various business units during the year incidents involving golden star vehicles resulted in the deaths of two people in the fatal accident a bogoso/prestea driver was returning to site from tarkwa when he lost control of the vehicle and hit three pedestrians two fatally in addition there were 172 accidents where vehicles m 100 80 60 40 20 contact damage bogoso/prestea fire wassa other exploration bogoso/prestea malaria incidence per employee 0.45 0.35 0.25 0.15 0.05 bogoso/prestea damage incidents ja 7 c0 de 7 v0 no 7 t0 oc 07 p se 7 0 g au 7 l0 ju 7 0 n ju 7 0 ay m 7 r0 ap 7 0 ar m 7 0 b fe 07 n wassa linear bogoso/prestea linear wassa 7 c0 de 7 0 p se 07 n ju 7 0 ar m 6 c0 de 6 0 p se 6 0 n ju 6 0 ar m 5 c0 de 5 0 p se 05 n ju 5 0 ar wassa linear bogoso/prestea linear wassa or equipment were damaged a summary graph is presented in response to this high level of incidents clear guidance was provided to the business units on the infringement penalties and our ceo endorsed a zero tolerance policy for speeding drivers who exceed the posted speed limits are suspended from driving for a minimum of 30 days our goal during 2008 will be to improve the overall safety performance of our operations such that there is a reduction in the number of incidents involving vehicles we have initiated the development and implementation of a guidance document that outlines the penalties for driving infringements 11

[close]

p. 14

[close]

p. 15

2 0 0 7 sustainabilityreport our community engagement and support o ur commitment to fund the community development fund is $1 per ounce of gold sold and 0.5 of pre-tax profits this is just one of the ways we share the success of the company with our local communities in addition we made a substantial investment in golden star oil palm plantations gsopp which has the potential to support 3,000 family groups when fully developed during 2007 we identified the need for improved communications with our stakeholder communities more specifically at bogoso/prestea communications between the stakeholder community consultation committees and golden star were not functioning well and the communities were filled with rumors the community affairs department at bogoso/prestea established a series of community consultation committees and held regular meetings to listen to community concerns and also to inform the communities about our operations our wassa mine continued its community consultation programs throughout 2007 in the review of the community engagement carried out for the board of directors a performance level 3 mac sustainability performance levels was achieved the goal for 2008 will be to consolidate this performance by enhancing the procedures and community consultation and to provide ways to integrate community affairs concerns into business decisions wassa initiated an interesting program for farmers who were potentially affected by the development of the sak pits when developing pits we create a safety buffer zone that is not directly affected by the operation but potentially causes limited access to farmland for our neighboring farmers to address the needs of these farmers contract work was offered to them at the wassa operation for the duration of the access restrictions to their farms initially there was some resistance to this proposal but once the farmers began working on the wassa rehabilitation crew they approached the operation to have their temporary contracts extended a key area of engagement at bogoso/prestea is the dumase community details on the planned resettlement of the community and the associated meetings and negotiations are provided below dumase background the dumase village is about 2 km from our bogoso site entrance and straddles the road linking bogoso and prestea in ghana s western region the dumase pit lies about 200 meters east of the village we would like to expand the existing dumase pit to mine the deeper mineral resources which would involve the resettlement of the dumase community for such a resettlement we are developing a resettlement action plan rap via extensive consultation with the dumase residents which should result in their agreement on a resettlement package additional regulatory approvals would also be sought we started the dumase resettlement project drp in 2007 using the international finance corporation ifc performance standard ps 5 to guide the work see www.ifc.org/ifcext/enviro.nsf/content/envsocstandards for more information 13

[close]