Golden Star Reports Financial Results for Fourth Quarter and Year-End 2007

Golden Star Resources Ltd. (AMEX:GSS)(TSX:GSC)(GSE:GSR) today announced its audited year-end results for 2007 and unaudited fourth quarter results. All currency in this news release is expressed in U.S. dollars, unless otherwise noted. The Company will host a live webcast and conference call, to discuss its quarterly results on Thursday, February 28, at 11:00 a.m. ET. To access the webcast and conference call, go to the home page of the Company’s website, www.gsr.com. Tom Mair, Interim President and CEO, said, "We achieved record Gold production in the full year and the fourth quarter despite a number of issues, including some beyond our control. We expect ongoing optimization of the Bogoso sulfide processing plant to contribute to improved bottom line results going forward. Many of the challenges that we faced in 2007, including the country-wide power restrictions in Ghana, appear to be behind us and we are looking forward to a consistently improving 2008.” Mr. Mair also commented that, "As disclosed in a separate press release, year-on-year Mineral Reserves increased 19% in 2007, primarily as the result of a positive feasibility study on the HBB properties; Mineral Reserves at Bogoso/Prestea increased year-on-year more than replacing depletion, and a partial replacement of rising depletion was also achieved at our Wassa mine.” 2007 RESULTS AND HIGHLIGHTS Net loss of $36.4 million, or $0.159 per share (including a valuation allowance for tax assets of $22.9 million or $0.101 per share); Operating cash flow of $6.7 million, or $0.029 per share; Increase in revenues of 43% to $175.6 million; Record gold sales of 246,278 ounces from Bogoso/Prestea and Wassa (not including 7,803 ounces produced by the Bogoso sulfide processing plant prior to its July 1, 2007 in-service date); Average realized gold price of $713 per ounce, up 17% from the 2006 average realized gold price of $607 per ounce; and Average cash operating cost of $602 per ounce. FOURTH QUARTER 2007 RESULTS AND HIGHLIGHTS Record quarterly gold sales of 88,015 ounces compared to 53,406 ounces of gold sales for the fourth quarter of 2006, a 64.8% increase; Increased gold sales at Wassa of 39,948 ounces compared to gold sales of 28,532 ounces for the fourth quarter of 2006. This represents a 40% increase in ounces of gold sold; Net loss of $17.8 million or $0.077 per share (including a valuation allowance for tax assets of $22.9 million or $0.098 per share; Revenues of $69.9 million; Development of the Hwini-Butre and Benso properties commenced with the start of construction of the haul road from Benso to Wassa in October 2007; and Completed offering of $125 million senior unsecured convertible debentures. OVERVIEW We had a net loss of $36.4 million or $0.159 per share, on revenues of $175.6 million for 2007 compared to net income of $64.7 million or $0.312 per share on revenues of $122.6 million for 2006. The net loss for 2007 was impacted by gains on sale of assets as well as by a tax valuation allowance and a loss on debt retirement as shown in the following table.             For the three months ended December 31,   For the twelve months ended December 31, SIGNIFICANT NON-OPERATING TRANSACTIONS ($000’s) 2007   2006 2007   2006 Gain on sale of EURO shares 1,748 29,963 5,049 50,903 Gain on sale of Moto shares - - - 30,240 Income statement impact of tax asst valuation allowance (22,944) - (22,944) - Gain on sale of Rosebel residual royalty 4,400 - 4,400 - Gain on collection of debt 3,000 - 3,000 - Loss on debt retirement (7,067) - (7,067) - Derivative mark-to-market gains/(losses) 211 (243) (232) (9,589) Foreign exchange gains/(losses) 251 9 (112) 2,330 Royalty income   -   -   -   4,026 Mine operating margin losses totaled $14.3 million in 2007, down from a $7.6 million positive operating margin in 2006. The primary operating factor influencing the 2007 results occurred in the second half of 2007 when the Bogoso sulfide processing plant was placed in service and its operating costs were recognized. Gold recovery difficulties associated with the start-up of the plant resulted in lower than anticipated revenues leading to a negative operating margin. In addition, there were industry-wide increases in the costs of labor, reagents, fuel and power that contributed to the lower margin in 2007 compared to 2006. A $22.9 million tax valuation allowance was taken in the fourth quarter against future tax assets. While this reduced the year-end tax benefit by $22.9 million, all $22.9 million of the benefit remains available for future use. Looking forward, we anticipate gold sales for 2008 of between 370,000 and 425,000 ounces at a cash operating cost between $490 and $540 per ounce. FINANCIAL SUMMARY           For the three months ended December 31,   For the twelve months ended December 31, SUMMARY OF FINANCIAL RESULTS 2007   2006 2007   2006 Gold sold (ounces) 88,015 53,406 246,278 201,406 Price realized ($ per ounce) 794 618 713 607 Cash operating cost ($ per ounce) 582 393 602 442 Royalties ($ per ounce) 20 17 21 18 Total cash cost ($ per ounce) 602 410 623 460 Total gold revenues (thousands $) 69,882 32,979 175,614 122,586 Cash flow from operations (thousands $) 2,272 5,316 6,670 5,398 Net income/(loss) (thousands $) (17,841) 30,749 (36,404) 64,689 Net income/(loss) per share ($) (0.077) 0.148 (0.159) 0.312 Shares outstanding (millions)   233.3   207.5   229.1   207.5     BOGOSO/PRESTEA                 For the three months ended December 31, For the twelve months ended December 31, OPERATING RESULTS 2007 2006 2007 2006 Ore mined (000’s t)—Refractory 894 - 1,427 - Ore mined (000’s t)—Non refractory 187 240 929 1,364 Total ore mined (000’s t) 1,081 240 2,357 1,364 Waste mined (000’s t) 5,334 258 18,516 6,013 Plant feed—Refractory (000’s t) 763 - 1,640 - Refractory grade—(g/t) 2.5 - 2.44 - Recovery—Refractory (%) 57.0 - 52.1 - Plant feed—Non refractory (t) 193 421 1,429 1,494 Non refractory grade—(g/t) 2.1 3.5 2.0 3.56 Recovery—Non refractory (%) 74.8 61.5 73.3 60.4 Gold sold (oz) 48,067 25,054 120,216(1) 103,792 Cash operating cost ($ per ounce) 746 309 766 412 Royalties ($ per oz) 20 20 22 18 Total cash cost ($ per ounce)   766   329   788 (1)   430 (1) Excludes 7,803 ounces from the new sulfide plant in the first six months of 2007. These ounces are not included in sales revenues. An operating margin loss of $23.9 million was incurred at Bogoso/Prestea during 2007 versus a positive operating margin of $8.4 million in 2006. The loss was primarily due to lower ore grades and insufficient oxide ore and partially due to delays in obtaining permits for the Pampe pit and to problems in the sulfide plant start-up in the second half of 2007. Total cash operating costs for the combined oxide and sulfide operations at Bogoso/Prestea were $94.7 million compared to $44.7 million in 2006. The majority of this increase is attributable to the new sulfide processing plant operations that went into commercial production on July 1, 2007.     WASSA         For the three months ended December 31, For the twelve months ended December 31, OPERATING RESULTS 2007   2006 2007   2006 Total ore mined (000’s t) 782 591 3,091 2,449 Waste mined (000’s t) 1,794 2,575 8,125 11,608 Ore and heap leach materials processed (000’s t) 900 891 3,752 3,691 Grade processed (g/t) 1.50 1.14 1.17 090 Recovery (%) 93.9 89.4 92.0 88.8 Gold sold (oz) 39,948 28,532 126,062 97,614 Cash operating cost($ per oz) 385 464 444 474 Royalties ($ per oz) 20 18 21 19 Total cash cost ($ per oz)   405   482   465   493 Wassa generated an operating margin of $9.6 million in 2007 compared to an operating margin loss of $0.8 million for 2006. The improved operating margin was primarily due to higher gold production resulting from a higher gold grade and higher gold prices. HBB PROPERTIES Construction on the 52 kilometer haul road linking the Benso property to the Wassa processing plant commenced in October 2007. The deposits at the Hwini-Butre and Benso properties will be mined as satellite deposits to provide high grade ore to the Wassa processing facility. We anticipate the first ore mined from the Benso property will be delivered to the Wassa processing plant in the third quarter of 2008. Construction of the road extension to the Hwini-Butre deposits is expected to continue in 2009 with the first high grade ore from Hwini-Butre expected to be mined and delivered to the Wassa processing plant in 2009. EXPLORATION A total of $13.9 million was spent on exploration expenditures during 2007, down from $15.3 million in 2006. As is our practice, the focus of our exploration activities centered on projects in near proximity to our operating mines. In support of this strategy, an airborne geophysical survey was flown by helicopter over our project areas along the Ashanti Trend. We anticipate drilling identified targets in 2008. Exploration in Ghana in 2007 focused on drilling programs at Wassa, Prestea South and the HBB properties. We have had encouraging results during the year and a number of these targets merit follow-up work in 2008. At our Newmont-funded joint venture on the Saramacca project in Suriname, we received encouraging results from the exploration efforts to date. Newmont has approved exploration expenditures of $3.5 million for continued exploration on Saramacca in 2008. CASH AND CASH FLOW Our cash, cash equivalents and short term investments totaled $75.8 million at the end of 2007, up from $27.1 million at the end of 2006. Operations provided $6.7 million in 2007, compared to $5.4 million for 2006. A $12.2 million increase in payables was offset by an inventory increase of $11.6 million. A total of $13.1 million was received from transactions related to EURO Ressources SA including sales of EURO shares, sale of our residual royalty in the Rosebel mine to EURO and the receipt of the final installment on their purchase of the Rosebel royalty. Liquidity Outlook We anticipate that all of our cash needs in 2008 will be met by the $75.8 million cash on hand at year end, amounts available from our Caterpillar equipment financing facility, the Ghana Stock Exchange listing proceeds and cash generated from operations. GHANA POWER RESTRICTIONS The past year was a drought year in Ghana and nation-wide power restrictions were in place until October 2007. In an effort to reduce our dependency on power from the national grid, Golden Star, along with three other mining companies, constructed a nominal 100 megawatt power plant in Ghana. In addition, we entered into a take-or-pay agreement with a power provider who will construct a 20 megawatt power station at the Bogoso site. Should electrical power once again become scarce, we anticipate that we would be able to self generate enough power to meet all our needs. LOOKING AHEAD Our objectives for 2008 include: Optimization of the Bogoso sulfide processing plant; Progress construction and development of the HBB properties; Permit Prestea South properties; Complete Prestea Underground pre-feasibility study Continued exploration at Bogoso/Prestea, Wassa and the HBB properties. We are estimating 2008 total gold production of 370,000 to 425,000 ounces at an average cash operating cost between $490 and $540 per ounce. FINANCIAL STATEMENTS The following information is excerpted from the Company’s audited consolidated financial statements and notes thereto contained in our Form 10-K, which we intend to file with the SEC today and which is available on our website.   As ofDecember 31, 2007 As ofDecember 31,2006 ASSETS CURRENT ASSETS Cash and cash equivalents $ 75,754 $ 27,108 Accounts receivable 8,369 8,820 Inventories (Note 3) 56,739 45,475 Deposits (Note 4) 4,513 7,673 Prepaids and other   1,224   1,458 Total Current Assets 146,599 90,534   RESTRICTED CASH 1,510 1,581 AVAILABLE-FOR-SALE INVESTMENTS (Note 5) 5,121 1,457 DEFERRED EXPLORATION AND DEVELOPMENT COSTS (Note 6) 29,203 167,983 PROPERTY, PLANT AND EQUIPMENT (Note 7) 283,304 93,058 MINING PROPERTIES (Note 8) 326,811 136,775 CONSTRUCTION IN PROGRESS (Note 9) — 165,155 FUTURE TAX ASSETS (Note 18) — 6,657 OTHER ASSETS   —   574 Total Assets $ 792,548 $ 663,774 LIABILITIES CURRENT LIABILITIES Accounts payable $ 26,457 $ 19,012 Accrued liabilities 28,394 25,516 Fair value of derivatives (Note 11) 248 685 Asset retirement obligations (Note 12) 2,013 3,064 Current portion of future tax liability (note 18) — 1,450 Current debt (Note 10)   17,125   12,549 Total Current Liabilities 74,237 62,276   LONG TERM DEBT (Note 10) 107,929 73,786 ASSET RETIREMENT OBLIGATIONS (Note 12) 16,906 16,034 FUTURE TAX LIABILITY (Note 18)   42,154   42,154 Total Liabilities 241,226 194,250   MINORITY INTEREST 6,150 7,424 COMMITMENTS AND CONTINGENCIES (Note 13) — —   SHAREHOLDERS’ EQUITY SHARE CAPITAL First preferred shares, without par value, unlimited shares authorized. No shares issued and outstanding. — — Common shares, without par value, unlimited shares authorized. Shares issued and outstanding: 233,703,681 at December 31, 2007 207,891,358 at December 31, 2006 (Note 15) 609,103 524,619 CONTRIBUTED SURPLUS 13,230 10,040 EQUITY COMPONENT OF CONVERTIBLE NOTES 34,620 2,857 ACCUMULATED OTHER COMPREHENSIVE INCOME (Note 16) 3,192 — DEFICIT   (114,973 )   (75,416 ) Total Shareholders’ Equity   545,172   462,100 Total Liabilities and Shareholders’ Equity $ 792,548 $ 663,774 Accompanying notes for the Balance Sheet can be found on the Form 10-K filed with the US SEC and on the Company’s website. Statements of Operations   For the years ended December 31,   2007       2006       2005   REVENUE Gold sales $ 175,614   $ 122,586   $ 89,663   PRODUCTION EXPENSES Mining operations 153,307 92,730 79,609 Depreciation, depletion and amortization 35,567 21,460 15,983 Accretion of asset retirement obligation (Note 12)   1,062     835     752   Mine operating costs   189,936       115,025       96,344     Mine operating margin (14,322 ) 7,561 (6,681 )   OTHER EXPENSES, (GAINS) AND LOSSES Exploration expense 1,953 1,462 951 General and administrative expense 13,869 10,873 8,879 Abandonment and impairment 3,499 1,847 1,403 Derivative mark-to-market losses (Note 11) 232 9,589 11,820 Loss on retirement of debt 7,067 — — Foreign exchange (gain)/loss 112 (2,330 ) 574 Interest expense 6,040 1,846 2,416 Interest and other income (2,173 ) (2,078 ) (1,624 ) Royalty income — (4,026 ) (4,178 ) Gain on sale of investments   (12,449 )   (81,143 )   (738 ) Income (loss) before minority interest (32,472 ) 71,521 (26,184 )   Minority interest   1,274     (794 )   (277 ) Net income (loss) before income tax (31,198 ) 70,727 (26,461 ) Income tax (expense) benefit (Note 18)   (5,206 )   (6,038 )   12,930   Net income (loss) $ (36,404 ) $ 64,689   $ (13,531 )   Net income (loss) per common share - basic (Note 19) $ (0.159 ) $ 0.312 $ (0.094 ) Net income (loss) per common share - diluted (Note 19) $ (0.159 ) $ 0.308 $ (0.094 ) Weighted average shares outstanding (millions)   229.1     207.5     143.6   Accompanying notes for the Statement of Operations can be found on the Form 10-K filed with the US SEC and on the Company’s website. COMPANY PROFILE Golden Star holds a 90% equity interest in Golden Star (Bogoso/Prestea) Limited and Golden Star (Wassa) Limited, which respectively own the Bogoso/Prestea and Wassa open-pit gold mines and also owns the Hwini-Butre and Benso properties through subsidiaries in Ghana. In addition, Golden Star has an 81% interest in the currently inactive Prestea Underground mine in Ghana, as well as gold exploration interests elsewhere in Ghana, in other parts of West Africa and in the Guiana Shield of South America. Golden Star has approximately 235 million shares outstanding. Statements Regarding Forward-Looking Information: Some statements contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. Such statements include comments regarding the availability of power, our alternative power supplies and ability to meet our power needs in the event of future power rationing, our 2008 production and cash operating cost estimates, capital expenditure estimates, planned exploration spending and activities, higher ore grades at Wassa, anticipated higher recoveries anticipated at various sites, expected improvements to the flotation circuit at the new Bogoso sulfide processing plant, the timing of achieving design recovery rates at the Bogoso sulfide processing plant, the impact of the Hwini-Butre and Benso deposits on the Wassa mine, anticipated commencement dates of mining and production and development costs with respect to the Hwini-Butre and Benso properties, plans for exploration, sources of and adequacy of cash to meet capital and other needs in 2008. Factors that could cause actual results to differ materially include timing of and unexpected events at the Bogoso/Prestea oxide and sulfide processing plant; variations in ore grade, tonnes mined, crushed or milled; variations in relative amounts of refractory, non-refractory and transition ores; delay or failure to receive board or government approvals and permits; the availability of electrical power, timing and availability of external financing on acceptable terms; technical, permitting, mining or processing issues, changes in U.S. and Canadian securities markets, and fluctuations in gold price and costs. There can be no assurance that future developments affecting the Company will be those anticipated by management. Please refer to the discussion of these and other factors in our Form 10-K for 2007, as amended. The forecasts contained in this press release constitute management’s current estimates, as of the date of this press release, with respect to the matters covered thereby. We expect that these estimates will change as new information is received and that actual results will vary from these estimates, possibly by material amounts. While we may elect to update these estimates at any time, we do not undertake to update any estimate at any particular time or in response to any particular event. Investors and others should not assume that any forecasts in this press release represent management’s estimate as of any date other than the date of this press release. Non-GAAP Financial Measures: In this news release, we use the terms "total cash cost per ounce" and "cash operating cost per ounce.” Total cash cost per ounce is equal to total production costs less depreciation, depletion, amortization and asset retirement obligation accretion divided by the number of ounces of gold sold during the period. Cash operating cost per ounce is equal to total cash costs less production royalties and production taxes, divided by the number of ounces of gold sold during the period. We use total cash cost per ounce and cash operating cost per ounce as key operating indicators. We monitor these measures monthly, comparing each month’s values to prior period’s values to detect trends that may indicate increases or decreases in operating efficiencies. These measures are also compared against budget to alert management to trends that may cause actual results to deviate from planned operational results. We provide these measures to our investors to allow them to also monitor operational efficiencies of our mines. We calculate these measures for both individual operating units and on a consolidated basis. Total cash cost per ounce and cash operating cost per ounce should be considered as Non-GAAP Financial Measures as defined in SEC Regulation S-K Item 10 and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. There are material limitations associated with the use of such non-GAAP measures. Since these measures do not incorporate revenues, changes in working capital and non-operating cash costs, they are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Changes in numerous factors including, but not limited to, mining rates, milling rates, gold grade, gold recovery, and the costs of labor, consumables and mine site general and administrative activities can cause these measures to increase or decrease. We believe that these measures are the same or similar to the measures of other gold mining companies, but may not be comparable to similarly titled measures in every instance. For further information, please contact:   GOLDEN STAR RESOURCES LTD. +1-800-553-8436 Bruce Higson-Smith, Vice President Corporate Development Anne Hite, Investor Relations Manager