p. 1

golden star 2 0 0 7 annualreport gold production ghana

[close]

p. 2

golden star resources ltd table of contents front cover

[close]

p. 3

production1 thousands ounces reserves1 millions ounces 500 5 4 3 2 1 0 03 04 05 06 07 08 09 03 04 05 06 07 400 300 200 100 0 actual estimated proven probable mineral reserves highlights for 2007 record gold sales of 246,278 ounces commercial production at bogoso sulfide processing plant was commenced on july 1 2007 power restrictions in ghana were lifted golden star has backup power in case of future restrictions initiated development of hbb project $83.0 million common share offering was completed $125 million convertible debenture offering was completed initiated listing of common shares on ghana stock exchange results 2007 production thousands oz1 reserves millions oz1 cash operating cost oz total cash cost oz gold price realized oz net loss earnings millions loss earnings per share operating cash flow millions capital expenditures millions cash at year end millions debt at year end millions shares outstanding at year end millions 246.3 4.93 602 623 713 2006 201.4 4.15 442 460 607 64.7 0.31 5.4 36.4 0.16 6.7 114.9 75.8 170.7 27.1 86.3 207.9 125.0 233.7 1 before minority interests all currency is stated in us dollars throughout this report except where noted.

[close]

p. 4

tom mair president and ceo r letter to shareholders this year 2007 was pivotal in the development of golden star most significantly we commenced commercial production at the bogoso sulfide processing plant on july 1 2007 increased mineral reserves net of depletion by 19 percent or approximately 800,000 ounces received board approval for the development of the hwini-butre and benso project and commenced construction of the haul road commenced mining at the pampe pit worked toward energy independence with the joint power station and the contract for a second power station at bogoso progressed the prestea underground project with a scoping study due in early 2008 listed golden star shares on the ghana stock exchange issued $125 million in convertible notes the company achieved record gold sales of 246,278 ounces our goal is to increase gold sales in 2008 to between 370,000 ­ 425,000 ounces and to between 500,000 ­ 560,000 ounces in 2009 by far the most anticipated event for the company during 2007 was the completion of construction and commissioning of the bogoso sulfide processing plant since more than 80 of the mineral reserves and mineral resources at the bogoso/prestea property are refractory we commenced construction of the bogoso sulfide processing plant in 2005 in march 2007 we switched on the bogoso sulfide processing plant and achieved commercial production in july 2007 the commissioning of the new plant was not without difficulties we experienced start-up issues with both the new flotation section and the bio-oxidation tank reactor agitator shafts modifications to the flotation circuit late in the third quarter 2007 resulted in achieving close to design flotation recovery due to a design flaw with the bio-oxidation tank agitator shaft all 14 shafts required replacement these shafts are custom made pieces of equipment and have long manufacturing lead time therefore it will take until first quarter 2008 to replace them all in response to drought conditions during 2006 which led to country-wide power restrictions we joined newmont mining company anglogold ashanti limited and gold fields limited in building a nominal 100 megawatt power station dedicated to the four mining companies additionally we signed a contract to construct a 20 megawatt power plant at bogoso in 2008 these 2

[close]

p. 5

2 0 0 7 annualreport new power stations combined with our existing generating capacity shall ensure our continued production with full power regardless of any future ghana national power grid rationing while all of these situations created difficult operating conditions throughout 2007 we were able to overcome and manage these challenges and thanks to our employees diligence and hard work golden star attained another record year of record gold sales the scoping study for the prestea underground is anticipated to be completed in early 2008 much of 2007 was dedicated to the refurbishment of the bondaye shaft at prestea which was damaged by illegal mining activities in 2006 refurbishment of the central shaft continued in 2007 and this will give us safe access to the prestea underground orebodies that will be the source of high grade ore for the bogoso sulfide processing plant in the future in addition we completed a drilling program from the surface into the footwall reef orebody which extends below the plant-north pit we commenced mining at the pampe deposit on the akosombo trend parallel to the ashanti trend in the first quarter of 2007 this deposit provided a source of oxide ore to the bogoso oxide processing plant during 2007 in addition to pampe oxide ore production will be enhanced for several years in the future by the mining of the prestea south deposits starting in early 2009 permitting of the prestea south deposits is underway another exciting development during 2007was commencement of development activities at the hwini-butre and benso hbb deposits in may 2007 the golden star board of directors approved the development of the hbb project with an estimated capital cost of approximately $50 million in october 2007 we commenced construction of the haul road linking the benso property with the wassa processing plant we anticipate that hbb ore will be delivered to the wassa processing plant in the third quarter of 2008 the high grade hbb ores that will be processed at the wassa processing plant will have a significantly positive effect on gold production and profitability of the wassa mine on the exploration side we increased mineral reserves by almost 1.1 million ounces not including approximately 300,000 ounces of depletion we continue to explore for gold both near our operating mines and with greenfields programs in the ivory coast burkina faso niger sierra leone suriname brazil and french guiana of note for 2007 was the airborne geophysical programs that were carried out during the year at bogoso/prestea and at the paul isnard project in french guiana the airborne survey at bogoso/prestea covered our entire property position along the ashanti trend data for both the bogoso/prestea and paul isnard geophysical surveys is still being analyzed but early 3

[close]

p. 6

g oldenstar indications are that the program has generated drill targets close to existing pits at bogoso/prestea and has extended our geological knowledge at paul isnard toward the end of 2007 we initiated the process to list golden star common shares on the ghana stock exchange gse this project was completed on february 15 2008 with shares of golden star trading freely on the gse we are delighted that ghanaian investors and ghanaian employees can now easily trade our shares in november 2007 we completed the sale of $125 million of convertible senior unsecured debentures the debentures mature on november 30 2012 and carry an interest rate of 4.0 and a conversion price of $5 per share a portion of this offering was used to retire our previous convertible notes which carried an interest rate of 6.85 and a conversion price of $4.50 the remainder was earmarked for the development of the hbb project and general corporate purposes finally a number of personnel changes occurred at golden star during 2007 mr s mitchel wasel was promoted to vice president exploration following the departure of dr doug jones doug had run our exploration programs for over four years and we wish him well in his future endeavors in australia mitch has been a golden star employee since 1993 and is an expert on west african shield and guiana shield geology we also named mr nigel tamlyn as the general manager for the bogoso/prestea mine fol lowing the departure of mr colin belshaw we wish the best for colin in his future activities and welcome nigel to the golden star team the most significant personnel change has been the departure of peter bradford from the company peter was instrumental in changing the direction of golden star in 1999 from an exploration company focused on south america into a midtier gold producer in ghana all of us would like to thank peter for his many years of service and wish him and his family all the best for the future in conclusion i would like to thank our loyal shareholders for the support you have shown the company this past year the company has faced significant operating challenges during this period we believe shareholders will soon be reaping the rewards of our efforts as we transition into a half-million-ounce gold producer we are looking forward to a successful and profitable future as our various projects develop and mature yours sincerely tom mair president ceo march 28 2008 4

[close]

p. 7

[close]

p. 8

g oldenstar mineral reserves mineral resources mineral reserves the following table summarizes our estimated proven and probable mineral reserves as of december 31 2007 and december 31 2006 proven tonnes millions 0.5 14.8 15.3 0.7 0.7 1.2 14.8 16.1 16.0 gold grade g/t 2.10 2.89 2.86 0.99 0.99 1.45 2.89 2.78 2.85 contained ounces millions 0.03 1.38 1.41 0.02 0.02 0.06 1.38 1.44 1.47 tonnes millions 7.3 22.1 29.4 16.9 16.9 24.2 22.1 46.3 39.2 probable gold grade g/t 2.59 2.66 2.64 1.82 1.82 2.06 2.66 2.35 2.13 contained ounces millions 0.61 1.89 2.50 0.99 0.99 1.60 1.89 3.49 2.68 tonnes millions 7.8 36.9 44.8 17.6 17.6 25.4 36.9 62.3 55.2 total gold grade g/t 2.55 2.75 2.72 1.79 1.79 2.03 2.75 2.46 2.34 contained ounces millions 0.64 3.27 3.91 1.01 1.01 1.66 3.27 4.93 4.15 property bogoso/prestea non refractory refractory total wassa non refractory total totals non refractory refractory total 2007 total 2006 notes to the mineral reserve statement our mineral reserves for 2007 were determined using a gold price of $560 per ounce which is approximately equal to the three year average price of gold and are based on a mine plan derived from optimized pit shells the stated mineral reserves have been prepared in accordance with canada s national instrument 43-101 standards of disclosure for mineral projects mineral reserves are equivalent to proven and probable reserves as defined by the us securities and exchange commission industry guide 7 the 2007 and 2006 mineral reserves have been prepared under the supervision of mr peter bourke p.eng vice president technical services for the company mr bourke is a qualified person as defined by canada s national instrument 43-101.additional information on the estimation of our mineral reserves can be found in the 10-k report filed with www.sedar.com and www.sec.gov mineral reserves are expressed on a 100 basis our share of the mineral reserves is subject to the government of ghana s 10 carried interest which entitles it to a 10 dividend once our capital costs have been recovered the terms non refractory and refractory refer to the metallurgical characteristics of the ore we plan to process the refractory ore in our sulfide processing plant at bogoso and to process the non refractory ore using our more conventional gravity flotation and cyanidation techniques mineral resources measured property bogoso/prestea prestea underground wassa benso hwini-butre goulagou paul isnard total 2007 total 2006 tonnes millions 3.1 ­ 0.1 ­ ­ ­ ­ 3.1 6.4 gold grade g/t 1 76 ­ 1.02 ­ ­ ­ ­ 1.75 2.02 indicated tonnes millions 10.2 1.1 4.8 0.6 0.4 2.7 ­ 20.0 34.7 gold grade g/t 2.28 16.30 1.06 2.30 4.89 1.80 ­ 2.72 2.48 measured indicated tonnes millions 13.3 1.1 4.9 0.6 0.4 2.7 ­ 23.2 41.0 gold grade g/t 2.16 16.30 1.06 2.35 4.89 1.80 ­ 2.59 2.40 inferred tonnes millions 2.8 5.0 0.1 0.7 0.9 0.5 10.2 20.2 28.7 gold grade g/t 3.04 8.26 0.80 3.36 4.87 1.02 1.70 3.68 3.05 notes to the mineral resources statement the mineral resources other than for goulagou were estimated using optimize pit shells at a gold price of $640 per ounce from which mineral reserves have been subtracted other than gold price the same optimized pit shell parameters and modifying factors used to determine the mineral reserves were used to determine the mineral resources for goulagou mineral resources were estimated using optimized pit shells at a gold price of $560 per ounce pit optimization parameters were estimated based on feasibility studies on other similar gold deposits in burkina faso golden star s experience in west africa and from limited metallurgical test work on the goulagou ores the mineral resources were estimated in accordance with the definitions and requirements of canada s national instrument 43-101 the mineral resources are equivalent to mineralized material as defined by the us sec commission industry guide 7 mineral resources are shown on a 100 basis the mineral resources shown above are subject to the government of ghana s 10 carried interest which entitles them to 10 of dividend once capital costs have been recovered in the case of bogoso/prestea and wassa the mineral resources at prestea underground are subject to the government of ghana s 19 minority interest with golden star currently having an 81 beneficial interest us investors should read the cautionary statements relating to mineral resources and inferred mineral resources in the company s 10-k report filed on www.sedar and www.sec.gov the qualified person for the estimation of the mineral resources is mr s mitchel wasel golden star s vice president of exploration 6

[close]

p. 9

ghana n map area 85 km mampon ashanti trend pampe bogoso north chujah-dumasi buesichem plant north bogoso processing plants bogoso 36 km mine processing plant prestea prestea south wassa subriso west g zone subriso east hbb haul road benso i zone hwini-butre adoikrom father brown ©2008 googletm

[close]

p. 10

[close]

p. 11

2 0 0 7 annualreport operations bogoso/prestea bogoso/prestea property n our bogoso/prestea property is located approximately 300 kilometers from the capital accra in the western ashanti trend ghana bogoso 85 km mampon region of ghana this property consists of both mining and exploration concessions along 85 kilometers of the ashanti trend and along approximately 20 kilometers the akropong trend situated parallel to the west of the ashanti trend there is excellent infrastructure within the concession areas allowing for easy and convenient transportation of ore to the central processing plant pampe bogoso north chujah-dumasi bogoso processing plants buesichem plant north bogoso prestea prestea south golden star owns a 90 interest in the bogoso/prestea property with a 10 carried interest held by the government of ghana dividends are payable only after recovery of capital costs the government of ghana also receives a 3 ©2008 googletm net smelter return royalty the bogoso/prestea property covers approximately 85 kilometers of strike length and is the largest landholding position along the ashanti trend historically we have mined the oxide ores at bogoso/prestea and now with the completion and commissioning of our bogoso sulfide processing plant active pits bogoso properties prestea properties exploration properties bogoso sulfide processing plant more than 80 of the ore at bogoso/prestea is refractory sulfide material that is metallurgically complex and difficult to treat by conventional carbon-in-leach processing tech nology therefore in 2005 the company commenced construction of a new processing facility designed to treat the refractory ore that was not amenable to processing in our bogoso oxide processing plant the bogoso sulfide processing plant has a nominal capacity of 3.5 million tonnes per annum and uses biox® bacterial oxidation technology to treat the refractory sulfide ore the sulfide processing plant combined with the 1.5 million tonnes per annum capacity of the bogoso oxide processing plant yields a total capacity of 5.0 million tonnes per year at bogoso/prestea our focus for 2007 was the completion and commissioning of the new bogoso sulfide processing we can take advantage of the sulfide potential of this region plant commercial production commenced on july 1 2007 with the third and fourth quarters of the year dedicated to optimization of the processing plant 2007 performance gold sales from bogoso/prestea totaled 120,216 ounces not including 7,803 ounces of gold produced prior to the commencement of commercial production while the new sulfide processing plant achieved its design throughput rate of 400 tonnes per hour by the end of the third quarter gold production was lower than expected due to poor recoveries in the sulfide flotation section of the new plant and defective agitator shafts in 9

[close]

p. 12

g oldenstar we operate our own fleet of excavators haul trucks and ancillary mining the bio-oxidation reactors in the fourth quarter of 2007 modifications made to the flotation section increased concentrate recoveries significantly by year-end more than half the defective agitator shafts had been replaced equipment at bogoso/prestea we have concentrated on open pit surface mining to date in the future we expect prestea underground with the power rationing situation behind us we were able to make significant progress on refurbishment of the central shaft at prestea during the second half of 2007 we also continued refurbishment work at the bondaye shaft which was damaged by illegal miner activities in late 2006 exploration drilling of the main reef footwall target during the fourth quarter and into 2008 is providing valuable information for the prestea underground scoping study completion of which we anticipate during the first half of 2008 we expect to publish an updated mineral resource estimate for the main reef footwall zone early in the second quarter of 2008 to add underground mining at prestea underground pending a positive scoping study later in 2008 the future our goals at bogoso/prestea are being fulfilled we have the largest land-holding position along the ashanti trend and we are systematically exploring and building a district-scale land position with the completion of the bogoso sulfide processing plant we have the capability to cost-effectively mine and process any ore type along the ashanti trend complete replacement of the defective agitator shafts will occur during 2008 and optimization of the sulfide plant continues we expect to complete the permitting of the prestea south properties in 2008 which will be a new source of oxide ore for the bogoso oxide processing plant the prestea underground development is advancing with shaft refurbishment work and with the expected completion of a scoping study in the first half of 2008 we anticipate production from bogoso/prestea to range between 235,000 and 275,000 ounces of gold in 2008 with a cash cost of $525 to $565 per ounce 10

[close]

p. 13

[close]

p. 14

[close]

p. 15

2 0 0 7 annualreport operations wassa wassa hwini-butre benso properties n the wassa mine is located approximately 35 kilometers ghana wassa hwini-butre benso father brown hwini-butre 36 km adoikrom east of the bogoso/prestea operation the property consists of several open pit mines and a carbon-in-leach cil processing plant operations commenced in 2005 and i zone subriso east subriso west g zone plant capacity ranges from 3.5 to 4.0 million tonnes per year depending on the hardness of the ore golden star owns a 90 interest in the wassa property a benso hbb haul road 10 carried interest is held by the government of ghana dividends are payable only after recovery of capital costs the government of ghana also receives a 3 net smelter return royalty wassa mine processing plant hbb properties ©2008 googletm since the acquisition of st jude resources in late 2005 golden star has been developing the hwini-butre and benso hbb project with the goal of providing additional high grade ore to the wassa processing plant in may 2007 a feasibility report on the hbb project was completed and the board of directors approved the construction of the project following receipt of the environmental permits in october active pits deposits wassa properties exploration properties hwini-butre benso properties 2007 construction commenced on the 52 kilometer road linking the benso deposit to the wassa processing plant our plan for the hbb properties is to mine approximately 1.2 million tonnes of ore per year truck hauling the ore to the wassa processing plant the ore will be combined with ore from the existing wassa pits with the effect of increasing the grade of material entering the processing plant this will result in a longer mine life lower operating costs and increased operating cash flow in december 2007 we announced results from recent drilling at benso which may convert some of the inferred mineral resources into the indicated mineral resource category our drilling programs at benso continue and it is likely that the existing pit designs will be deepened due to continuing good results further south at hwini-butre deep high grade intercepts suggest the potential of underground mining in the future 2007 performance gold sales from wassa totaled 126,062 ounces which surpassed the company s guidance of 115,000 to 125,000 ounces for the year throughout the year wassa exhibited quarter-over-quarter improvement in gold production outlook wassa continues to deliver positive results and with the processing of high grade ore from the hbb project coming on-line in the third quarter of 2008 we anticipate more of the same going forward our guidance for 2008 at wassa is a range between 135,000 and 150,000 ounces of gold at a cash operating cost of $440 to $490 per ounce produced 13

[close]