Golden Star Reports Record Annual Gold Sales and Financial Results for Fourth Quarter and Year-End 2008

Golden Star Resources Ltd. (NYSE Alternext U.S.: GSS) (TSX: GSC) (GSE: GSR) today announced its audited year-end results for 2008 and unaudited fourth quarter 2008 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 26, 2009 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, President and CEO, said, "Most importantly, Golden Star surpassed its fourth quarter guidance in terms of both Gold sales and costs. We also achieved record gold production in the full year despite some challenging circumstances. We continue to work to improve all aspects of our business with particular attention to both our cost containment exercise, which has been very successful to date, and to more reliable operations at the Bogoso sulfide plant. Many of the challenges that we faced last year were not specifically related to Golden Star but, rather, were issues faced by the mining industry in particular, and the world economic situation in general. The world is now facing very severe economic conditions and we believe that the gold bull market will continue.”

"As we discussed at our last conference call, we are very cognizant of our costs and began our cost cutting exercises in the fourth quarter. This process continues in 2009. We have experienced some relief on fuel and labor costs and we continue our negotiations for lower electrical power tariffs going forward,” continued Tom Mair.

2008 RESULTS AND HIGHLIGHTS

• Record annual gold sales of 295,926 ounces for 2008, a 20% increase over 2007;
• Surpassed fourth quarter guidance. Sold 86,144 ounces of gold. Quarterly cash cost of $637 per ounce, an almost 27% improvement over third quarter cash operating costs;
• Gold revenues for the year of $257.4 million representing an increase of 46.5% over 2007;
• Net loss of $120.1 million for the year, or $0.509 per share, including a non-cash $16.4 million stockpile inventory adjustment and $60.7 million of asset impairment write-offs net of tax. Adjusted loss before inventory and impairment write-offs was $43.0 million or $0.182 per share;
• Operating cash flow of $30.0 million for 2008, or $0.127 per share;
• Year-end cash balance of $33.6 million versus $25.3 million at the end of the third quarter of 2008;
• Fourth quarter gold sales of 86,144 ounces compared to 74,042 ounces of gold sales for the third quarter of 2008, a 16.3% increase;
• A doubling of fourth quarter gold sales at Wassa of 45,952 ounces compared to gold sales of 22,083 ounces for the third quarter of 2008;
• Bogoso/Prestea fourth quarter gold sales of 40,192 ounces compared to gold sales of 51,959 ounces for the third quarter of 2008;
• Commencement of mining at Benso at the end of the third quarter; and
• Began construction of haul road from Benso to Hwini-Butre.

OVERVIEW

Golden Star bettered its fourth quarter guidance with quarterly gold sales of 86,144 ounces, versus the guidance of 85,000 ounces for the quarter. Additionally, cash operating costs for the fourth quarter were $637 per ounce, an improvement over guidance of $700 per ounce. Gold sales for the full year of 2008 totaled 295,926 ounces, a new record for the company. The addition of Benso and soon Hwini-Butre ore flow will enhance gold sales at Wassa and permitting and expected mining of the Prestea South ore bodies will assist Bogoso with oxide ore during 2009.

We had a net loss of $120.1 million or $0.509 per share, on revenues of $257.4 million for 2008 compared to net loss of $36.4 million or $0.159 per share on revenues of $175.6 million for 2007. The net loss for 2008 was impacted by $68.4 million of impairment write-offs and $16.4 million of transition ore stockpile inventory adjustments.

The other significant factor contributing to our costs and net loss for the year was the increased input costs that were experienced not only at Golden Star but also throughout the industry. From early 2007 to mid 2008, power rates increased from $0.060 per kilowatt hour to $0.178 per kilowatt hour, an increase of 197%. Fuel costs were another critical factor to our increased costs in 2008. Fuel costs continued to increase throughout most of 2008 reaching a high of $1.37 per liter in October. However, fuel costs have decreased from October’s high and now range in the $0.75 to $0.85 per liter level and negotiations continue for lower electricity prices.

FINANCIAL SUMMARY

BOGOSO/PRESTEA

This year was the first full year of production at Bogoso/Prestea since the sulfide processing plant was placed into production mid-year 2007. Bogoso increased its gold sold to 170,499 ounces, a 42% increase over the prior year. Bogoso was challenged through the increase in operating input costs such as electricity and fuel and labor but showed improvements in operating availabilities and recovery rates at the sulfide plant. Sulfide plant recoveries steadily improved from 57.0% in the fourth quarter of 2007 to 71.1% in the fourth quarter of 2008, reaching to 74% in December.

Total cash operating costs for the combined oxide and sulfide operations at Bogoso/Prestea were $159.8 million compared to $92.2 million in 2007. Most of this increase is attributable to a full year of sulfide operations in 2008 compared to only six months in 2007. As we move into 2009, we expect relief on the cost side due to our cost cutting programs and lower fuel and other input costs.

WASSA

Wassa generated an operating margin of $4.9 million in 2008 compared to an operating margin of $9.6 million for 2007. The decreased operating margin was primarily due to increased input costs such as electricity, fuel, consumables and labor. However, the road from Wassa to Benso was commissioned in 2008 allowing the delivery of high grade ore from Benso. A total of 291,000 tonnes grading 4.14 grams per tonne was trucked from Benso to Wassa during 2008. Additionally, the haul road extension that will connect the high grade Hwini-Butre properties to the Benso-Wassa road commenced construction in the fourth quarter of 2008.

EXPLORATION

A total of $15.8 million was spent on exploration during 2008, up from $13.9 million in 2007. The focus of our exploration activities was centered on projects in close proximity to our operating mines. The airborne geophysical survey that was flown by helicopter over our project areas along the Ashanti Trend continues to be analyzed to provide further drill targets close to existing operations for 2009.

Exploration in Ghana in 2008 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 2009.

Outside of Ghana, exploration activities continued in Sierra Leone, Côte d’Ivoire, Burkina Faso, Niger, Suriname, French Guiana and Brazil. Follow up drilling is planned for the Mano River joint venture in Sierra Leone where zones of massive sulfides have been identified. In Côte d’Ivoire, soil anomalies at Amelikia, Abengourou and Agboville will be followed up to identify drill targets for 2010. Early stage exploration continues at the Goulagou property in Burkina Faso. In 2008, soil sampling was conducted at Deba and Tialkam in Niger. Newmont continues to fund our exploration activities at the Saramacca property in Suriname. In French Guiana, we still are on hold pending clarification of allowable mining activities from the Government of France. In Brazil, we have four active project areas that are located in the states of Minas Gerais and Mato Grosso.

CASH AND CASH FLOW

Our cash, cash equivalents and short term investments totaled $33.6 million at the end of 2008, compared to $75.8 million at the end of 2007 and $25.3 million at the end of the third quarter of 2008. Cash flow from operations totaled $30.0 million in 2008 compared to $6.7 million in 2007. The 2008 capital investments of $76.7 million represent the final major capital commitment to our long term strategy of building Bogoso/Prestea and Wassa into profitable operations. All future sustaining capital requirements are expected to be funded from operating cash flows.

Liquidity Outlook

We anticipate that all of our cash needs in 2009 will be met by the $33.6 million cash on hand at year end and cash generated from current operations and equipment financing facilities already in place.

LOOKING AHEAD

Our objectives for 2009 include the following:

• Optimization of the Bogoso sulfide processing plant to further improve throughput and recovery rates and reduce costs;
• Complete construction of the Hwini-Butre haul road for ore delivery to Wassa during the second half of 2009;
• Finalize permitting of the Prestea South properties; and
• Continue exploration at Bogoso/Prestea, Wassa and the HBB properties.

Our guidance for 2009 is estimated to be as follows:

MINERAL RESERVES AND MINERAL RESOURCES

Mineral Reserves, after mining depletion, decreased by 1.65 million ounces, or 33%, during 2008 to 35.5 million tonnes grading 2.87 grams per tonne (g/t) for contained gold of 3.28 million ounces at year end. The decrease was the result of a combination of factors including depletion, increased costs associated with mining and processing, and design and engineering changes resulting in increases of cut-off grades.

Year-on-year Mineral Reserves decreased in 2008. This was a possibility at the end of June 2008 when significantly higher energy and consumables costs became a reality. At that time, we discussed in conference calls that the cut-off ore grades would most likely increase and that this situation would lead to other changes in the Company’s mine plans. Golden Star continues to explore in the areas surrounding its primary operations and expects to increase its Mineral Reserves and Mineral Resources going forward.”

Measured and Indicated Mineral Resources, exclusive of Mineral Reserves, increased to 27.0 million tonnes grading 2.76 grams per tonne of gold while Inferred Mineral Resources decreased slightly to 19.0 million tonnes grading 3.94 grams per tonne gold.

At Bogoso/Prestea, Proven and Probable Mineral Reserves declined from 3.91 million ounces to 2.36 million ounces of gold. After mining depletion, this decrease was primarily the result of increased operating costs, especially increased electricity costs. Most of the ounces of gold that were removed from Mineral Reserves have been categorized as Mineral Resources which indicates that future changes in our operating costs could result in recategorization of some of these Mineral Resources back into Mineral Reserves.

Proven and Probable Mineral Reserves at Wassa, which includes the Hwini-Butre Benso (HBB) properties, declined slightly from 1.01 million ounces to 0.91 million ounces. Mineral Reserves at Wassa decreased primarily due to mining depletion and cost increases while Mineral Reserves at HBB increased by approximately 90,000 ounces due to drilling and benefits of higher gold prices.

Reconciliation of Mineral Reserves

The following table sets out the primary factors that impacted our Mineral Reserves during 2008.

The 2008 and 2007 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. The Qualified Person for the estimation of the Mineral Resources is S. Mitchel Wasel, Golden Star Resources Vice President of Exploration.

FINANCIAL STATEMENTS The following information is derived from the Company’s audited consolidated financial statements contained in our Form 10-K, which we filed with the SEC today and is available on our 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 236 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 improvement of our cost structure, including lower electrical power, fuel and input costs; the completion of the haul road from Hwini-Butre to Benso and the commencement of mining at the Hwini-Butre property; the impact of the HBB properties on Wassa gold sales; permitting and the mining at Prestea South and the impact on Bogoso gold sales; planned exploration activities and drilling, including exploration at Bogoso/Prestea, Wassa, and the HBB properties; the ability to fund sustaining capital requirements; optimization of throughput and recovery rates at the Bogoso sulfide processing plant; our 2009 production and cash operating cost estimates, capital expenditure estimates, sources of and adequacy of cash to meet capital and other needs in 2009; and the ability to convert mineral resources into mineral reserves. 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 and cost 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 and general economic conditions. 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 2008. 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 "cash operating cost per ounce.” 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 cash operating cost per ounce as a key operating indicator. We monitor this measure monthly, comparing each month’s values to prior period’s values to detect trends that may indicate increases or decreases in operating efficiencies. This measure is also compared against budget to alert management to trends that may cause actual results to deviate from planned operational results. We provide this measure to our investors to allow them to also monitor operational efficiencies of our mines. We calculate this measure for both individual operating units and on a consolidated basis. 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 this measure does not incorporate revenues, changes in working capital and non-operating cash costs, it is 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.