United states securities and exchange commission



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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-K

[ X ] Annual report pursuant to Section 13 or 15(d) of the Securities


Exchange Act of 1934 (Fee Required)

For the Fiscal Year ended December 31, 1996


or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities


Exchange Act of 1934 (No Fee Required)
Commission file number 0-21708


GOLDEN STAR RESOURCES LTD.
(Exact Name of Registrant as Specified in Its Charter)


Canada 98-0101955
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

One Norwest Center, 1700 Lincoln Street,


Suite 1950, Denver, Colorado 80203
(Address of Principal Executive Office) (Zip Code)

(303) 830-9000


(Registrant's telephone number, including area code)

Securities registered or to be registered pursuant to Section 12(b) of the Act:




Name of Exchange
Title of Each Class on which Registered
------------------- -------------------

Common Shares AMERICAN STOCK EXCHANGE


TORONTO STOCK EXCHANGE

Securities registered or to be registered pursuant to Section 12(g) of


the Act: NONE

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes___X No ______

Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form l0-K. ______

The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $369 million as of March 14, 1997, based on the closing price of the shares on the American Stock Exchange of $13.875 per share.

Number of Common Shares outstanding as of March 14, 1997: 26,622,636.

DOCUMENTS INCORPORATED BY REFERENCE

The Company's 1997 Proxy Statement and Information Circular for the 1997 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 1996 pursuant to Regulation 14A under the Securities Exchange Act of 1934, is incorporated by reference into Part III hereof.

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TABLE OF CONTENTS



PART I


ITEM 1. DESCRIPTION OF BUSINESS

ITEM 2. DESCRIPTION OF PROPERTIES

ITEM 3. LEGAL PROCEEDINGS

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY


AND RELATED STOCKHOLDER MATTERS

ITEM 6. SELECTED FINANCIAL DATA

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS


ON FORM 8-K

The Registrant will furnish a copy of any exhibit filed as part of this report to any shareholder of record upon receipt of a written request from such person and payment of the Registrant's reasonable expenses for furnishing such exhibit. Requests should be made to the Secretary of the Registrant at the address set forth on the cover page of this report.



REPORTING CURRENCY AND FINANCIAL INFORMATION

All amounts in this Report are expressed in United States dollars, unless otherwise indicated. References to (i) "Cdn" are to Canadian dollars, (ii) "FF" are to French francs and (iii) "R" are to Brazilian reals.

Financial information is presented in accordance with accounting principles generally accepted in Canada. Differences between accounting principles generally accepted in the United States and those applied in Canada, as applicable to the Company, are explained in Note 17 to the Consolidated Financial Statements.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-K constitute "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressly stated or implied by such forward-looking statements. Such factors include, among others, the following: gold and diamond exploration and development costs and results, fluctuation of gold prices, foreign operations and foreign government regulation, competition, uninsured risks, recovery of reserves, capitalization and commercial viability and requirement for obtaining permits and licenses.


(See "Item 1. Risk Factors".)

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PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

Golden Star Resources Ltd. (the "Registrant" or the "Company") is an international gold and diamond exploration company with a diverse portfolio of active exploration and development projects, and an operating mine, in over ten countries on two continents. The Company's core focus is on the acquisition, discovery and development of gold and diamond projects. Once it identifies such projects, the Company's business strategy is, if appropriate, to enter into partnership arrangements with major mining companies to develop and operate mines. The Company currently has interests in properties in various stages of development in Guyana, French Guiana, Suriname, Brazil and Bolivia in South America, and Eritrea, Ethiopia, Gabon, Ivory Coast, Kenya, Mali and Sierra Leone in Africa.

The Company's efforts are concentrated in a geologic domain known as greenstone belts, which are ancient volcanic- sedimentary rock assemblages. Greenstone belts are known to be favorable geologic environments for gold mineralization and account for a significant proportion of the world's historic gold production. The Company began its exploration activities in 1985 in the tropical, Proterozoic greenstone belts of the Guiana Shield, and more recently extended its activities to the geologically related greenstone belts of the Brazilian Shield and the West African Shield, and finally to the greenstone belts of eastern Africa.

The Company's interest in gold production as at March 14, 1997, was in the form of a 30% common share equity interest in Omai Gold Mines Limited, a company incorporated under the laws of Guyana ("OGML"), the owner and operator of the Omai Gold Mine in Guyana (the "Omai Mine") (see "Item 2. Description of Property - Guyana Properties - Producing Property: Omai Mine"). A final feasibility study is expected to be completed on the Company's second major project, Gross Rosebel, located in Suriname during 1997.

The head office of the Company is located at One Norwest Center, 1700 Lincoln Street, Suite 1950, Denver, Colorado 80203, and the Company's registered and records office is located at 19th Floor, 885 West Georgia Street, Vancouver, British Columbia V6C 3H4. As at March 14, 1997, the Company and its subsidiaries had a total of 658 full-time employees, of which 33 were based in Denver, one in Miami and the balance were employed in the various countries of South America and Africa in which the Company and its subsidiaries carry on their operations.

The Company was established under the Canada Business Corporations Act on May 15, 1992 as a result of the amalgamation (the "Amalgamation") of South American Goldfields Inc. ("South American"), a Canadian corporation, and Golden Star Resources Ltd. ("Golden Star"), an Alberta corporation. Golden Star was originally incorporated under the provisions of the Alberta Business Corporations Act on March 7, 1984 as Southern Star Resources Ltd., and its name was changed on February 25, 1985 to Golden Star Resources Ltd. Concurrent with the Amalgamation, the common shares of the Company were consolidated on a one-for-two basis (the "Share Consolidation"). Reference to common shares herein shall, unless otherwise indicated, mean common shares of the Company after the Amalgamation and the Share Consolidation. The fiscal year-end of the Company is December 31.

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The Company has established a decentralized structure through region-specific subsidiaries in order to facilitate effective management of its geographically diverse portfolio of mineral properties, to improve access to capital markets and to better allow the equity markets to value the Company's mineral property portfolio. The Company currently directly manages all activities in Guyana and Suriname and indirectly manages activities outside Guyana and Suriname through its subsidiaries. The Company has created two publicly traded subsidiaries. Guyanor Ressources S.A. ("Guyanor") is approximately 68% owned by Golden Star and is incorporated under the laws of France. Guyanor was established in order to comply with the laws of France which require that mining titles be held by a French company. Guyanor's Class B common shares are listed on the Toronto Stock Exchange under the symbol "GRL.B" and on the Nouveau Marche of the Bourse de Paris under the symbol "GUYN". Pan African Resources Corporation, a corporation incorporated under the laws of Yukon in Canada ("PARC"), is approximately 58% owned by Golden Star and was created in recognition of the unique risk profile of establishing exploration projects in Africa. PARC's common shares are quoted on the Canadian Dealing Network under the symbol "PARC". Southern Star Resources Ltd., a corporation incorporated under the laws of Barbados ("Southern Star"), is a wholly owned subsidiary of the Company and was created in 1995 to conduct activities in South America outside of the Guiana Shield.



BUSINESS STRATEGY

The Company's business strategy is to focus on its core skills of gold and diamond exploration and property acquisition, with the ultimate goal of holding significant interests in large scale gold and diamond mines. The Company's business strategy is comprised of the following elements:

# Focus on exploration. The Company believes that the greatest increase in shareholder value in the gold and diamond mining sector comes from the discovery of mineral deposits. The Company intends to continue to concentrate its exploration efforts in its areas of expertise, gold and diamond exploration, in the tropical greenstone belts of the Guiana Shield, Brazilian Shield, West African Shield and the greenstone belts of eastern Africa.

# Concentrate on current portfolio of properties. The Company intends to focus its efforts on advancing the most promising projects within its current portfolio of properties to the feasibility stage. The Company continues to pursue new opportunities and may make selective additional acquisitions of promising properties.

# Partner with major mining companies. The Company intends to continue to leverage its exploration capital by entering into partnership arrangements with major mining companies that have the technical skills and financial resources to develop and operate large modern mining operations. This strategy enables the Company to transfer a portion of the business and financial risks associated with exploration and development to its partners and utilize a greater portion of its funds to explore and develop additional projects.

# Maintain a strong local presence in the countries where the Company operates. The Company intends to continue its practice of locating offices, the majority of its employees and certain of its executives in countries where the Company has exploration, development and mining interests. Many of the Company's employees are from countries in which the Company operates. The Company believes that its local presence and hiring practices support its exploration efforts by enabling the Company to establish and maintain relationships with local government officials and business leaders. In addition, the Company believes that its decentralized local management structure enables it to make better informed exploration and management decisions.

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CERTAIN SIGNIFICANT EVENTS IN 1996 AND RECENT DEVELOPMENTS

On January 8, 1996, Cambior Inc. ("Cambior") exercised its option to acquire a 50% interest in the Company's Gross Rosebel project in Suriname. Cambior fulfilled the condition to exercise its option under the option agreement signed in June of 1994, having spent $6.0 million for exploration and development activities on the property. (See "Item 2. Description of Properties - Suriname Properties - Gross Rosebel".)

In February 1996, the Government of Guyana approved the resumption of operations at the Omai Gold Mine following a tailings pond incident in August 1995 and construction of the first stage of the new tailings pond was completed. Appropriate measures were taken to ensure safe and environmentally sound operations. The mine resumed operations on February 4, 1996. The total incident-related costs at the Omai Mine for the shutdown period are estimated at $11.3 million. (See "Item 2. Guyana Prospectus - Producing Property: Omai Mine")

On February 5, 1996, Pan African Resources Corporation, a company incorporated under the laws of Yukon ("PARC Yukon"), which was, prior to that date, approximately 85% owned by the Company, completed a private placement (the "Private Placement") of 13.2 million units at Cdn$1.00 per unit. Each unit consisted of one common share and one-half of one common share purchase warrant of PARC Yukon. The Private Placement generated net proceeds to PARC Yukon of approximately $9.0 million after payment of commissions and expenses. Each warrant entitled the holder to purchase one common share of PARC Yukon at Cdn$1.25 until January 31, 1997. A total of 1,063,500 warrants were exercised providing proceeds of an additional $1.0 million. (See "Item 2. African Properties - General".)

On February 6, 1996, PARC Yukon was amalgamated (the "PARC Amalgamation") under the Yukon Business Corporation Act with Humlin Red Lake Mines Limited, an Ontario corporation. As a result of the Private Placement and the PARC Amalgamation, the Company's interest was reduced to approximately 60% of the 45.3 million outstanding shares of PARC, the amalgamated company. On February 8, 1996, PARC became a publicly traded company in Canada with its common shares quoted on the Canadian Dealing Network. (See "Item 2. African Properties - General".)

On March 6, 1996, the Company effected a public offering in Canada of 1.75 million units at a price of Cdn$10.50 per unit for total proceeds of Cdn$18.375 million. Each unit consisted of one common share and one-half of one common share purchase warrant (each whole warrant being designated as a "Warrant") of the Company. Each Warrant was exercisable into one common share of the Company on or prior to March 6, 1997, at a price of Cdn$11.00. As at March 6, 1997, all 875,000 Warrants have been exercised providing proceeds of $7.0 million.

On March 26, 1996, Cambior and the Company announced estimated mining reserves of 24 million tonnes grading 1.4 g Au/t on the Gross Rosebel property in Suriname, representing 1.1 million ounces of gold in situ.

On April 24, 1996, the Company announced the adoption by its Board of Directors of a Shareholder Rights Plan (the "Rights Plan") designed to encourage the fair treatment of shareholders in connection with any tender offer for the Company's shares. The Rights Plan provides the Board of Directors of the Company and shareholders with more time to fully consider any unsolicited tender offer for the

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Company. It also allows more time for the Board of Directors to pursue, if appropriate, other alternatives to maximize shareholder value. The shareholders of the Company ratified the adoption of the Rights Plan at their June 11, 1996 annual general meeting. The Plan will expire in 1999. Under the Rights Plan, the Company issued one right (a "Right") for each common share of the Company outstanding on April 24, 1996. The Company will also issue one Right for each common share issued in the future. The Rights issued under the Rights Plan become exercisable only when a person, including any party related to it, acquires or announces its intention to acquire 20% or more of the Company's outstanding common shares without complying with the "Permitted Bid" provisions of the Rights Plan or without approval of the Board of Directors of the Company. Should such an acquisition occur, each right would, upon exercise, entitle a rights holder, other than the acquiring person and persons related to it, to purchase common shares of the Company at a 50% discount to the market price at the time. (See "Item 8. Financial Statements and Supplementary Data - Notes to the Consolidated Financial Statements - 14. Share Capital.")



In August 1996, the Company announced that Venhold Investments (1994) Ltd., an indirectly controlled subsidiary of the Company, concluded a final termination and settlement agreement in connection with the "unwinding" of its purchase of controlling interests in certain mineral properties located in Venezuela. Therefore, the Company has no remaining interest in Venezuela. The Company recorded a gain of $0.9 million in 1996 as a result of a settlement payment of $1.6 million.

In September 1996, the Company and Cambior announced an increase in estimated proven and probable mining reserves at the Gross Rosebel project in Suriname. Proven and probable mining reserves at Gross Rosebel were calculated to be in excess of 30 million tonnes grading 1.5 g Au/t, representing approximately 1.4 million ounces of gold in situ, a 25% increase over the March 1996 estimate at a higher grade and lower overall strip ratio. This increase reflected a new reserve calculation completed on the Pay Caro zone, which includes both the former Pay Caro and East Pay Caro zones. Information included in the calculation was based on drilling and trenching completed through June 30, 1996. The reserve calculation did not include drilling and trenching completed through June 30, 1996, on the Koolhoven and Bigi Asanjangmoni trends on the North Block of the Gross Rosebel property. Saprolite (soft rock) mineralization constituted 72% of the updated reserves.




--------------------------------------------------------------------------------------------------------------
RESERVE HARD ROCK (1) SOFT ROCK (2) TOTAL STRIP
ESTIMATE AS OF ('000 TONNES @ G AU/T) ('000 TONNES @ G AU/T) ('000 TONNES @ G AU/T) RATIO
--------------------------------------------------------------------------------------------------------------
September 1996 8,590 @ 1.8 21,860 @ 1.3 30,450 @ 1.5 2.8:1
--------------------------------------------------------------------------------------------------------------
March 1996 3,459 @ 1.8 20,594 @ 1.3 24,053 @ 1.4 2.9:1
--------------------------------------------------------------------------------------------------------------

(1) Hard rock cutoff grade of 0.7 g Au/t


(2) Soft rock cutoff grade of 0.5 g Au/t

On September 25, 1996, the Company announced the filing with the Securities and Exchange Commission ("SEC") of a shelf registration statement on Form S-3 (the "Registration Statement"), with respect to the proposed issuance by the Company from time to time of up to $75.0 million of its common shares, preferred shares, convertible debt securities and/or warrants. On November 6, 1996, the Company filed an amendment to the Registration Statement with the SEC and the Registration Statement, as amended, was declared effective by the SEC on November 8, 1996.

On October 15, 1996, the Company filed with nine Canadian provincial securities commissions (i) a short-form shelf prospectus, with respect to the proposed issuance by the Company from time to time of up to 5.0 million common shares and/or 5.0 million common share purchase warrants and (ii) a short-form shelf prospectus with respect to the proposed issuance of up to $75.0 million of convertible debt securities. Final short-form shelf prospectuses were filed on November 7, 1996, and the filing became effective on November 8, 1996.

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On October 30, 1996, a final prospectus was approved by French regulatory authorities entitling Guyanor to (i) list its Class B common shares for trading on the Nouveau Marche of the Bourse de Paris in France, and (ii) sell 1.0 million of its Class B common shares. Trading of Guyanor's Class B common shares on the Nouveau Marche began on October 30, 1996. A placement of Guyanor shares in Europe was completed on November 5, 1996. In connection therewith, Guyanor received net proceeds of approximately 45.5 million French francs (approximately $8.9 million), and the Company's interest in Guyanor was reduced to approximately 68%.

On January 10, 1997, PARC sold its interest in Lafayette Mining Gabon Ltd. ("LMG"), which holds an exploration permit on the Eteke property, pursuant to the exercise of a right of first refusal by Lafayette Holdings Corp. ("Lafayette") under an option agreement (dated September 4, 1994) and a joint venture agreement (dated May 5, 1995) between Lafayette and PARC. Under its first right of refusal, Lafayette purchased all of PARC's interest in LMG and all related rights and obligations of PARC under the joint venture agreement, the option agreement and any other related agreement for the sum of $640,000. As a result, the Company and PARC incurred a charge in the fourth quarter of 1996 of $5.3 million for the write-down of capitalized exploration expenditures for the Eteke property.

On January 30, 1997, Guyanor and the Company announced their intent to discontinue alluvial gold production in French Guiana by Societe de Travaux Publics et de Mines Auriferes en Guyane ("SOTRAPMAG"), a wholly-owned subsidiary of Guyanor. SOTRAPMAG has experienced continuing operating losses since its acquisition in 1994. Outside consultants engaged in 1996 to review the operation and make recommendations on how to make the operation profitable concluded that without a significant capital investment to increase production, changes in certain work practices and a reduction in fuel taxes, the operation could not achieve profitability. As a result of these factors, Guyanor has begun implementation of a program to discontinue SOTRAPMAG's alluvial operation in the first quarter of 1997. The Company and Guyanor incurred a fourth quarter charge to 1996 earnings of $3.2 million for the write down of assets and accrual of closure costs. (See "Item 2. Guyanor Ressources S.A. - Paul Isnard and Eau Blanche - Mining Operations.")

On February 19, 1997, an option agreement was signed between Societe des Mines de St-Elie, SARL and a French company pursuant to which SMSE may acquire three concessions and one exploration permit immediately adjacent to the east and the south of the St-Elie concession, over a 155 km(2) area known as "Dieu-Merci".


(See "Item 2. Guyanor Ressources S.A. - St-Elie and Dieu-Merci.")

In March of 1997, the Company decided to write-down as at December 31, 1996 the capitalized deferred exploration in the Dul Mountain project in Ethiopia. The charge to earnings was $4.0 million. The Company's share of this charge, after minority interest, was $2.3 million. (See "Item 2. African Properties - Ethiopia property.")


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