Golden Star Approves Development of Hwini-Butre and Benso Gold Project

Golden Star Resources Ltd. (AMEX: GSS) (TSX: GSC) is pleased to announce that its Board of Directors has approved the development of the Hwini-Butre and Benso Gold project. Peter Bradford, President and CEO, said, "The development of Hwini-Butre and Benso as a satellite source of feed for our Wassa gold mine is expected to have a significant impact on Wassa, resulting in an increase in processed grade, production profile and life for the combined operation as well as an improvement in the average cash operating cost per ounce. "The new development will not be without its challenges but we believe that we have provided for sufficient capital expenditure and time to deal with these challenges and still start delivering high grade ore from Hwini-Butre and Benso to Wassa in the third quarter of 2008. "Likewise, Hwini-Butre and Benso, and the surrounding areas, present a number of opportunities to grow the Mineral Reserves and Mineral Resources. All pits modeled at Hwini-Butre and Benso have the potential to benefit from further infill drilling and higher gold prices and the opportunity exists to extend the pits further. At Father Brown, on the Hwini-Butre concession, further infill drilling may identify sufficient grade and continuity to potentially support underground mining below the final pit. Lastly, our regional exploration on our surrounding concessions is returning encouraging initial results. In particular, we are excited about a new trend to the south and east of Hwini-Butre, on the Manso concession, and our exploration personnel are now focused on the further evaluation of this area.” LOCATION The Hwini-Butre and Benso concessions are located in the Western Region of Ghana, south of Golden Star’s Wassa Gold Mine. The Benso concessions are north-northwest of Takoradi and approximately 40 kilometers (straight line distance) south-southwest of the Wassa gold mine. The Benso Prospecting License is composed of three land parcels, Subriso, Amantin and Chichiwilli. To date the Subriso concession has been the most thoroughly explored with four economic deposits being delineated thus far, namely Subriso East, Subriso West, C-Zone and G-Zone. The Hwini-Butre concession is located 30 kilometers south of the Benso Subriso deposits and east of the town of Mpohor, which is 20 kilometers northwest of Takoradi. Two economic deposits have been delineated, namely Adoikrom and Father Brown. DEVELOPMENT CONCEPT The underlying concept for the feasibility study and development of Hwini-Butre and Benso is to provide a source of high grade mill feed for the Wassa CIL processing plant. The mining would be conducted by Golden Star while ore haulage would be done by contractors. Competitive tenders for the haulroad construction and haulage have already been received. The four small pits at the Benso Subriso concession will be exploited first. Construction of a 52 kilometer haulroad would commence in the third quarter of 2007 and is expected to be completed by mid-2008. Pre-stripping and ore mining at Benso would commence in the second quarter of 2008 and the first ore would be hauled to Wassa for processing in the third quarter of 2008. The two higher grade deposits on the Hwini-Butre concession, south of Benso, are scheduled to be mined following the completion of the 30 kilometer haulroad in the second quarter of 2009. Metallurgical test work has indicated that the Hwini-Butre and Benso ore is harder than the Wassa ore which should result in higher milling costs and a slightly reduced throughput. In addition, the number of CIL tanks will be increased from six to eight at Wassa to increase the total residence time and achieve design metallurgical recoveries. This will have the added benefit of improving the recovery from the Wassa feed. FEASIBILITY STUDY ASSUMPTIONS AND RESULTS A detailed feasibility study for the Hwini-Butre and Benso project has been completed and approved by the Golden Star Board of Directors. The feasibility study Business Case was based on the following assumptions: Parameter   Units   Business Case(1) Start up capital expenditure   $ (millions)   50  Development time period   Months   14  Gold price revenue assumption   $ per ounce   600  Total material mined   Tonnes (millions)   42.3  Ore mined and processed   Tonnes (millions)   4.7  Average ore mining & processing rate   Tonnes per year (millions)   1.2  Average ore grade   Au grams per tonne   4.06  Average gold recovery   Percent   92.1  Royalty to Ghana Government   Percent   3  1st Royalty to Third Party on Benso   Percent   1.5  2nd Royalty to Third Party on Benso   $ per ounce   1.00  Mining cost(2)   $ per tonne mined   1.30  Haulage cost(2)   $ per tonne of ore   9.74  Processing cost(2)   $ per tonne of ore   6.66  G&A cost(2)   $ per tonne of ore   2.66  (1) Based on Measured and Indicated Mineral Resources only and assumes a $560 per ounce gold price for pit optimization, pit design and cut-off grade estimation. All other modifying factors as per the Mineral Reserves have been applied to the Measured and Indicated Mineral Resources used in this analysis. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. (2) Weighted averages based on assumptions made from the feasibility study. Based on these assumptions the key results arising from the feasibility study were: Parameter   Units   Business Case(1) Hwini-Butre & Benso gold sold(2)   Ounces per year   110,000  Hwini-Butre & Benso gold sold(3)   Ounces   565,261  Cash operating costs—total(4)   $ per ounce   256  Net Present Value (@5%)   $ (millions)   100  Internal Rate of Return   Percent   74  Payback Period   Months   9  Mine life   Months   50  (1) Based on Measured and Indicated Mineral Resources only and assumes a $560 per ounce gold price for pit optimization, pit design and cut-off grade estimation. All other modifying factors as per the Mineral Reserves have been applied to the Measured and Indicated Mineral Resources used in this analysis. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. (2) Average incremental increase in gold production from Wassa in 2009 and 2010 as a result of Hwini-Butre and Benso. (3) Life of mine gold production derived from Hwini-Butre and Benso. (4) Average life of mine incremental cash operating cost for the gold production attributable to Hwini-Butre and Benso. In addition to the Business Case, which was based on pits designs around a $560 per ounce optimized shell, we also carried out an economic analysis of a "Reserve Case” to support the stated Mineral Reserves. The Reserve Case produced 531,082 ounces of gold sold at an average cash operating cost of $225 per ounce and demonstrated an NPV(5%) at a gold price of $480 per ounce of $56 million and an internal rate of return of 57%. OWNERSHIP AND PERMITTING Golden Star acquired the Hwini-Butre and Benso properties in 2005 when it acquired St Jude Resources Limited. Pursuant to the Ghana Minerals and Mining Act, 2006, the Government of Ghana is entitled to a 10% carried interest in the projects. An environmental permit for the development of a standalone project at Hwini-Butre and Benso was obtained in early 2006. We now plan to mine the Hwini-Butre and Benso deposits as a source of ore for our Wassa CIL processing plant and to haul material from Hwini-Butre and Benso to Wassa by road. This will require an amendment to the environmental permit. It is expected that the amended environmental permit and the mining lease will be obtained in the third quarter of 2007, at which time construction of the road would commence. CAPITAL EXPENDITURE The total capital expenditure for the development of Hwini-Butre and Benso has been estimated at $50.1 million with a further $1.8 million expected to be spent on sustaining capital expenditure items over the life of the mine. The capital cost for the development phase is as follows: Item   $ (millions) Mining equipment   20.6  Haulroad construction   11.9  Wassa processing plant modifications   3.5  Hwini-Butre & Benso infrastructure   5.4  Compensation for haulroad and pits   3.1  Ownership payment   1.0  Contingency (about 10%)   4.6  Total   50.1  MINERAL RESERVES As at April 27, 2007, a Probable Mineral Reserve of 4.13 million tonnes grading 4.35 grams of gold per tonne for 577,000 ounces of contained gold has been estimated at Hwini-Butre and Benso. These Mineral Reserves were estimated at a gold price of $480/oz, which is the same gold price that Golden Star used for its December 31, 2006 Mineral Reserve statement. Hwini-Butre and Benso – Mineral Reserves as of April 27, 2007   Location   Reserve Category   Tonnes (millions)   Grade (Au g/t)   Contained Ounces (thousands) Hwini-Butre   Probable   1.83    5.52    324  Benso   Probable   2.30    3.41    252  TOTAL   Probable   4.13    4.35    577  On a pro-forma basis, the addition of new Mineral Reserves at Hwini-Butre and Benso increases Golden Star’s total Mineral Reserves by 14% to 59.3 million tonnes grading 2.48 grams per tonne for contained gold of 4.73 million ounces, as set out below. Proven and Probable Mineral Reserves as of December 31, 2006 Adjusted to Include Hwini-Butre and Benso as of April 27, 2007   Property Proven Probable Total Tonnes (millions) Gold Grade (g/t) Con-tained Ounces (mil-lions) Tonnes (millions) Gold Grade (g/t) Con-tained Ounces (mil-lions) Tonnes (millions) Gold Grade (g/t) Con-tained Ounces (mil-lions) Bogoso/ Prestea Non-refrac- tory 0.9  2.30  0.07  6.9  2.59  0.57  7.8  2.56  0.64  Refrac- tory 14.5  2.95  1.38  19.3  2.65  1.64  33.8  2.78  3.02  Total 15.5  2.91  1.45  26.2  2.64  2.22  41.6  2.74  3.67  Wassa Wassa Main pits 0.5  1.08  0.02  13.0  1.11  0.46  13.6  1.11  0.48  Hwini-Butre & Benso 0.0  0.00  0.00  4.1  4.35  0.58  4.1  4.35  0.58  Total 0.5  1.08  0.02  17.2  1.89  1.04  17.7  1.86  1.06  Total 2006 16.0  2.85  1.47  43.3  2.34  3.26  59.3  2.48  4.73  MINERAL RESOURCES Following the conversion of a portion of the Mineral Resource at Hwini-Butre and Benso to Mineral Reserves, the Mineral Resource has been restated as at April 27, 2007, to reflect the exclusion of that part of the Mineral Resource which has been converted to Mineral Reserves. The estimated Mineral Resources, which are in addition to the Mineral Reserves, are as follows: Hwini-Butre and Benso – Mineral Resources as of April 27, 2007   Category   Tonnes (millions)   Grade (Au g/t) Indicated         Hwini-Butre   0.32    4.28  Benso   0.41    2.47  Total   0.73    3.23  Inferred         Hwini-Butre   0.29    4.39  Benso   0.61    3.41  Total   0.89    3.73  NOTES TO THE MINERAL RESERVES AND MINERAL RESOURCES 1. The stated Mineral Reserves and Mineral Resources have been prepared in accordance with Canada’s National Instrument 43-101 Standards of Disclosure for Mineral Projects. These Mineral Reserves are equivalent to Proven and Probable Reserves and Mineral Resources are equivalent to Mineralized Material as defined by the United States Securities and Exchange Commission Industry Guide 7. 2. The Mineral Reserves have been prepared under the supervision of Mr. Peter Bourke, P.Eng., Vice President Technical Services for the Company. The Mineral Resources have been prepared under the supervision of Mr. S. Mitchel Wasel, Exploration Manager for the Company. Both Mr. Bourke and Mr. Wasel are qualified persons as defined by Canada’s National Instrument 43-101. 3. The Mineral Reserves were estimated using a gold price of $480 per ounce and Mineral Resources were estimated using a gold price of $560 per ounce. The Mineral Reserves are based on a mine design and plan derived from an optimized pit shell. The Mineral Resources are contained within an optimized pit shell and are in addition to the Mineral Reserves. 4. Optimized pit parameters were based on first principle estimates and historical operating costs at Wassa and assume haulage to the existing Wassa CIL processing plant based on contract rates resulting from a competitive tender. Metallurgical testwork by AMMTEC on the Hwini-Butre and Benso ore types indicate that they are non-refractory and estimates gold recoveries of around 92.8% for the Benso property and 88.9% and 95.8% for the Adoikrom and Father Brown deposits respectively on the Hwini-Butre property. Geotechnical drilling and tests have been reviewed by SRK Consulting and their recommendations for pit wall angles have been incorporated into the optimized pit parameters. Mining dilution of 10% and mining recovery of 95% has been assumed. 5. Mineral Resources are reported using a block grade cut-off of 1.13 grams per tonne for oxide material, 1.26 grams per tonne for fresh material at Benso and 1.48 grams per tonne for oxide and 1.61 grams per tonne for fresh at Hwini-Butre. 6. Mineral Reserves and Mineral Resources are expressed on a 100% basis. Golden Star’s share of the Mineral Reserves and Mineral Resources is subject to the Government of Ghana’s 10% carried interest which entitles them to a 10% dividend once our capital costs have been recovered. 7. Numbers may not add due to rounding. Standards of Disclosure This news release has been prepared in accordance with Canada’s National Instrument 43-101, Standards of Disclosure for Mineral Projects. Drilling, sampling and laboratory quality assurance and control have been overseen and reviewed by S. Mitchel Wasel, our Exploration Manager, West Africa. Mr. Wasel is a qualified geologist with 18 years of experience in gold and base metal exploration and is a Member of the Australasian Institute of Mining and Metallurgy. All diamond drill core is being sawn on site, with half the core lengths sent to TransWorld Laboratories in Tarkwa, Ghana, for sample preparation and analysis. The remaining half core is stored on site for future inspection and detailed logging, to provide information on mineralogy, structure, alteration patterns and the controls on gold mineralization. A portion of the halved core has been quartered with one portion being sent for metallurgical test work and the other remaining in the core shed for reference. All RAB and RC holes are initially sampled in three meter composites, with intervals exceeding 0.2 grams of gold per tonne being resampled on one meter intervals. All sample preparation, crushing and analysis are carried out at the TransWorld Laboratories in Tarkwa, Ghana. Samples are subjected to 12-hour BLEG Leachwell analysis of 1,000 gram sub-samples pulverized to 85% at minus 75 microns (200#) to a quoted accuracy of 10 parts per billion of gold. All analytical work is subject to a systematic and rigorous Quality Assurance-Quality Control (QA-QC). At least 5% of samples are blanks, duplicates and certified standards and the accuracy of the analysis is confirmed to be acceptable from comparison of the recommended and actual ‘standard’ results. COMPANY PROFILE Golden Star is an un-hedged gold producer that holds a 90% equity interest in the Bogoso/Prestea and Wassa open-pit gold mines in Ghana. In addition, Golden Star has an 81% interest in the currently inactive Prestea Underground mine in Ghana and various property interests elsewhere in the country, as well as other gold exploration interests in West Africa and in the Guiana Shield of South America. Golden Star has approximately 233 million common shares outstanding. Note regarding Canada’s National Instrument 43-101: The above disclosure has been reviewed by our Qualified Persons, Mr. S. Mitchel Wasel, Exploration Manager in Ghana, and Mr. Peter Bourke, P.Eng., Vice President Technical Services. Cautionary Note to US Investors concerning estimates of Measured and Indicated Mineral Resources: US investors are advised that while the terms "measured mineral resources” and "indicated mineral resources” are recognized and required by Canadian regulations, the US Securities and Exchange Commission does not recognize them. US investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. Cautionary Note to US Investors concerning estimates of Inferred Mineral Resources: US investors are advised that while the term "inferred mineral resources” is recognized and required by Canadian regulations, the US Securities and Exchange Commission does not recognize it. "Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules estimates of inferred mineral resources could not form the basis of feasibility or other economic studies. US investors are cautioned not to assume that part or all of the inferred mineral resource exists, or is economically or legally mineable. 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. 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 future operations and development of Hwini-Butre and Benso, including the amount and grade of reserves and resources, the cost to develop, permit and complete haulage roads, successful utilization of the Wassa processing plant, the accuracy of assumptions in the feasibility study, anticipated production and planned exploration activities. Factors that could cause actual results to differ materially include timing of and unexpected events during exploration, construction and start-up; variations in ore grade; variations in relative amounts of refractory, non-refractory and transition ores; delay or failure to receive board or government approvals; timing and availability of external financing on acceptable terms; technical or permitting issues, 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 2006.