-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HxQ8B6lFZjcA0gQxmaeIu36iDsrZ/5eBRJlsVj+HHOijVHBzFZMM05IRdZW9JRVQ 1XwkAbdKxomvOy8UOTIp7A== 0001035704-97-000378.txt : 19971117 0001035704-97-000378.hdr.sgml : 19971117 ACCESSION NUMBER: 0001035704-97-000378 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLDEN STAR RESOURCES LTD CENTRAL INDEX KEY: 0000903571 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 980101955 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12284 FILM NUMBER: 97717845 BUSINESS ADDRESS: STREET 1: 1660 LINCOLN ST STE 3000 STREET 2: SUITE 3000 CITY: DENVER STATE: CO ZIP: 80264 BUSINESS PHONE: 3038309000 MAIL ADDRESS: STREET 1: 1700 LINCOLN ST STREET 2: STE 1950 CITY: DENVER STATE: CO ZIP: 80203 10-Q 1 FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------- FORM 10-Q ---------- [ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period ended September 30, 1997 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________. 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.) 1660 Lincoln Street, Suite 3000, Denver, Colorado 80264 (Address of Principal Executive Office) (Zip Code) (303) 830-9000 (Registrant's telephone number, including area code) 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 ------ ------ Number of Common Shares outstanding as of November 7, 1997: 29,737,136. 2 GOLDEN STAR RESOURCES LTD. INDEX Part I - Financial Information Item 1. Financial Statements...................................................................1 Item 2. Management's Discussion and Analysis of Financial Condition, Results of Operations and Recent Developments.........................................13 Part II - Other Information Item 1. Legal Proceedings.....................................................................19 Item 6. Exhibits and Reports on Form 8-K......................................................19 Signatures..............................................................................................20
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this report 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 express or implied by such forward-looking statements. Such factors include, among others, 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 requirements for obtaining permits and licenses. i 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GOLDEN STAR RESOURCES LTD. CONSOLIDATED BALANCE SHEETS (Stated in thousands of United States Dollars except share amounts) - -------------------------------------------------------------------------------
(Unaudited) As of September 30, As of December 31, ASSETS 1997 1996 ------------------- ------------------ CURRENT ASSETS Cash and short-term investments $ 21,250 $ 15,663 Accounts receivable 3,026 5,116 Inventories 569 1,027 Other assets 370 376 ---------------- ---------------- Total Current Assets 25,215 22,182 RESTRICTED CASH $ 765 $ 2,015 DEFERRED EXPLORATION 73,574 64,721 INVESTMENT IN OMAI GOLD MINES LIMITED 2,407 3,279 FIXED ASSETS 1,382 3,666 OTHER ASSETS 116 420 ---------------- ---------------- Total Assets $ 103,459 $ 96,283 ================ ================ LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities $ 2,899 $ 5,830 Accrued wages and payroll taxes 726 1,065 ---------------- ---------------- Total Current Liabilities $ 3,625 $ 6,895 OTHER LIABILITIES 104 92 ---------------- ---------------- Total Liabilities 3,729 6,987 ---------------- ---------------- MINORITY INTEREST 8,248 11,202 ---------------- ---------------- COMMITMENTS AND CONTINGENCIES (Note 8) SHAREHOLDERS' EQUITY SHARE CAPITAL 157,767 129,954 (Common shares, without par value, unlimited shares authorized. Shares issued and outstanding: September 30, 1997 - 29,690,136; December 31, 1996 - 25,941,103) Stock option loans (4,011) (4,012) DEFICIT (62,274) (47,848) ---------------- ---------------- Total Shareholders' Equity 91,482 78,094 ---------------- ---------------- Total Liabilities and Shareholders' Equity $ 103,459 $ 96,283 ================ ================
The accompanying notes are an integral part of these consolidated financial statements 1 4 GOLDEN STAR RESOURCES LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (Stated in thousands of United States Dollars except per share amounts) (Unaudited) - -------------------------------------------------------------------------------
Three Months Nine Months Ended September 30 Ended September 30 -------------------- -------------------- 1997 1996 1997 1996 -------- -------- -------- -------- REVENUE Precious metals sales $ 4 $ 184 $ 443 $ 1,353 Interest and other 346 249 871 825 -------- -------- -------- -------- 350 433 1,314 2,178 COSTS AND EXPENSES Cost of goods sold 9 843 987 3,066 Depreciation 151 291 711 874 General and administrative 2,148 1,806 6,483 6,315 Exploration expense 275 51 754 162 Recovery of abandonment loss -- -- -- (936) Abandonment and impairment of mineral properties 3,503 -- 9,573 -- Gain on sale of assets (301) -- (302) (58) Loss on impairment of assets 1,522 -- 1,522 -- Interest and bank charges (6) -- 15 -- Foreign exchange loss 27 37 50 114 -------- -------- -------- -------- 7,328 3,028 19,793 9,537 PROFIT (LOSS) BEFORE THE UNDERNOTED (6,978) (2,595) (18,479) (7,359) Gain on subsidiary's issuance of common stock -- -- -- 2,001 Omai Preferred Share Redemptions 151 -- 1,050 -- -------- -------- -------- -------- Net profit (loss) before minority interest (6,827) (2,595) (17,429) (5,358) Minority interest loss 1,707 588 3,003 1,690 -------- -------- -------- -------- NET PROFIT (LOSS) $ (5,120) $ (2,007) $(14,426) $ (3,668) ======== ======== ======== ======== NET PROFIT (LOSS) PER SHARE $ (0.17) $ (0.09) $ (0.50) $ (0.15) ======== ======== ======== ======== Weighted Average Shares Outstanding (Millions of shares) 29.7 22.3 28.8 25.1 ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements 2 5 GOLDEN STAR RESOURCES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Stated in thousands of United States Dollars) (Unaudited) - -------------------------------------------------------------------------------
Nine Months Ended Nine Months Ended September 30, 1997 September 30, 1996 ------------------ ------------------ OPERATING ACTIVITIES: Net loss $ (14,426) $ (3,668) Reconciliation of net loss to net cash used in operations: Depreciation 711 874 Premium on Omai Preferred Share Redemptions (1,050) -- Recovery of abandonment loss -- (936) Gain on sale of assets (302) (58) Loss on impairment of assets 1,522 -- Abandonment and write-down of mineral properties 9,573 -- Gain on issuance of common stock by subsidiary -- (2,001) Minority interest (3,003) (1,690) Changes in non-cash operating working capital (796) 660 ---------------- ---------------- Net Cash Flows Used in Operating Activities (7,771) (6,819) ---------------- ---------------- INVESTING ACTIVITIES: Expenditures on mineral properties, net of joint venture recoveries (18,426) (15,670) Fixed asset purchases (327) (1,517) Depreciation capitalized as deferred exploration 264 -- Proceeds from sale of equipment 486 -- Omai Preferred Share Redemptions 1,922 -- Other assets 10 -- Other assets and investments 41 786 ---------------- ---------------- Net Cash Flows Used in Investing Activities (16,030) (16,401) ---------------- ---------------- FINANCING ACTIVITIES: Restricted cash 1,250 (3,550) Line of credit -- 5,000 Proceeds from issuance of subsidiary's stock 29 10,545 Offering costs of subsidiary (25) (273) Increase in minority interest 45 274 Issuance of share capital 22,513 12,886 Issuance of share capital under warrants 5,429 3,979 Issuance of share capital under options 140 6,476 Stock option loan receipts (additions) 1 (2,653) Other 6 16 ---------------- ---------------- Net Cash Flows Provided by Financing Activities 29,388 32,700 ---------------- ---------------- Increase in cash 5,587 9,480 Cash and short-term investments, beginning of period 15,663 9,498 ---------------- ---------------- Cash and short-term investments, end of period $ 21,250 $ 18,978 ================ ================
The accompanying notes are an integral part of these consolidated financial statements 3 6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (All tabular amounts in thousands of United States Dollars) These financial statements and notes thereto should be read in conjunction with the financial statements and related notes included in the annual report on Form 10-K for Golden Star Resources Ltd. (the "Company") for the fiscal year ended December 31, 1996 on file with the Securities and Exchange Commission in the United States and the provincial securities commissions in Canada (hereinafter referred to as "the Company's 1996 10-K"). All amounts are in United States dollars unless otherwise stated. The unaudited financial statements as of September 30, 1997, and for the nine months ended September 30, 1997 and 1996, reflect all adjustments, consisting solely of normal recurring items, which are necessary for a fair presentation of financial position, results of operations, and cash flows on a basis consistent with that of the prior audited consolidated financial statements. (1) INVENTORIES
September 30, 1997 December 31, 1996 ------------------ ----------------- Precious Metals Inventory $ 53 $ 384 Materials and Supplies 516 643 ------ ------ $ 569 $1,027 ====== ======
In the third quarter of 1997, the Company recorded an impairment reserve for certain materials and supplies inventories at its SOTRAPMAG subsidiary which may have future recoverable values less than recorded amounts. The charge for this write-down was $0.1 million. (2) FIXED ASSETS
September 30, 1997 December 31, 1996 ------------------ ----------------- Building $ -- $ 1,833 Machinery & Equipment 3,105 4,676 ------------ ------------ 3,105 6,509 Accumulated Depreciation (1,723) (2,843) ------------ ------------ $ 1,382 $ 3,666 ============ ============
During the second quarter of 1997, SOTRAPMAG initiated a plan to sell certain equipment and machinery from the mine site. Sales of $0.5 million were completed as of September 30, 1997, with gains of $0.3 million recorded on the sales. In the third quarter of 1997, the Company recorded an impairment reserve for the remaining buildings, machinery, and equipment at SOTRAPMAG which may have future recoverable values less than recorded amounts. The charge for this write-down was $1.4 million. The Company intends to continue efforts to sell equipment and other fixed assets formerly used at the SOTRAPMAG operations. Any proceeds from such asset sales would be used to offset the impairment charges in future periods. 4 7 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) (All tabular amounts in thousands of United States Dollars) (3) DEFERRED EXPLORATION
Deferred Deferred Exploration Exploration Expenditures Capitalized Capitalized Joint Property Expenditures as at Exploration Acquisition Venture Impairments & as at Dec. 31, 1996 Expenditures Expenditures Recoveries Abandonments September 30, 1997 ------------- ------------ ------------ ------------ ------------ ------------------ UYANA Eagle Mountain $ 111 $ 716 $ -- $ -- $ -- $ 827 Quartz Hill 1,347 -- -- -- -- 1,347 Upper Potaro Diamond / Amatuk Diamond 1,010 137 8 -- -- 1,155 Mazaruni / Upper Mazaruni Diamond 2,729 101 (60) -- (2,429) 341 Wenamu Gold 512 -- -- -- -- 512 Five Stars Gold 5,767 569 (108) -- (2,308) 3,920 Five Stars Diamond 1,097 776 48 -- (41) 1,880 BHP Gold Projects 151 152 -- -- -- 303 Guyana Diamond Permits 27 201 -- (119) -- 109 Other 1,376 (129) -- -- -- 1,247 ------------ ------------ ------------ ------------ ------------ ------------ Sub-total 14,127 2,523 (112) (119) (4,778) 11,641 ------------ ------------ ------------ ------------ ------------ ------------ SURINAME Benzdorp / Lawa 3,341 3 -- -- -- 3,344 Gross Rosebel 9,494 8,043 -- (4,205) -- 13,332 Headley's Right of 311 -- -- -- -- 311 Exploration Thunder Mountain 453 -- -- -- -- 453 Saramacca 1,569 152 98 (33) -- 1,786 Sara Kreek 155 339 75 4 -- 573 Tempati Reconnaissance 161 42 75 7 -- 285 Tapanahony Reconnaissance 86 46 75 4 -- 211 Kleine Saramacca 104 3 -- -- -- 107 Lawa Antino 764 1,273 -- -- -- 2,037 Suriname Diamond Projects 310 159 -- -- -- 469 Ulemari Reconnaissance 53 195 -- (16) -- 232 Other 252 9 -- -- -- 261 ------------ ------------ ------------ ------------ ------------ ------------ Sub-total 17,053 10,264 323 (4,239) -- 23,401 ------------ ------------ ------------ ------------ ------------ ------------ FRENCH GUIANA (GUYANOR RESSOURCES S.A.) Dorlin 628 2,476 -- (2,324) -- 780 St-Elie 1,973 1,661 -- (1,661) -- 1,973 Dieu-Merci 382 475 -- (475) -- 382 Yaou 7,087 1,223 -- (1,023) -- 7,287 Paul Isnard / Eau Blanche 3,629 1,081 -- (1,081) -- 3,629 SOTRAPMAG 1,520 333 134 -- -- 1,987 Dachine 575 611 2 -- -- 1,188 Other 1,331 (25) -- -- (913) 393 Diamond Projects 204 (1) -- -- -- 203 ------------ ------------ ------------ ------------ ------------ ------------ Sub-total 17,329 7,834 136 (6,564) (913) 17,822 ------------ ------------ ------------ ------------ ------------ ------------ AFRICA (PAN AFRICAN RESOURCES CORPORATION) Ivory Coast / Comoe 3,951 745 -- -- (399) 4,297 Mali / Dioulafoundou 2,763 352 42 -- (2,250) 907 Mali / Melgue 56 63 -- -- -- 119 Mali / Other 30 31 -- -- -- 61 Eritrea / Galla Valley 1,317 480 4 -- -- 1,801 Eritrea / Other 55 -- -- -- -- 55 Kenya / Ndori 901 644 -- -- -- 1,545 Burkina Faso -- 13 -- -- -- 13 Other 53 (18) -- -- -- 35 ------------ ------------ ------------ ------------ ------------ ------------ Sub-total 9,126 2,310 46 -- (2,649) 8,833 ------------ ------------ ------------ ------------ ------------ ------------
5 8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) (All tabular amounts in thousands of United States Dollars)
Deferred Deferred Exploration Exploration Expenditures Capitalized Capitalized Joint Property Expenditures as at Exploration Acquisition Venture Impairments & as at Dec. 31, 1996 Expenditures Expenditures Recoveries Abandonments September 30, 1997 ------------- ------------ ------------ ------------ ------------ ------------------ LATIN AMERICA (SOUTHERN STAR RESOURCES LTD.) Brazil / Andorinhas 3,371 3,433 533 -- -- 7,337 Brazil / Abacaxis 1,307 677 7 -- -- 1,991 Brazil / Other 869 672 -- -- -- 1,541 Bolivia / San Simon 768 20 -- -- (473) 315 Bolivia / Sunsas 198 176 1 -- (338) 37 Bolivia / Other 584 348 24 -- (422) 534 Other (11) 68 -- -- -- 57 ------------ ------------ ------------ ------------ ------------ ------------ Sub-total 7,086 5,394 565 -- (1,233) 11,812 ------------ ------------ ------------ ------------ ------------ ------------ OTHER -- 65 -- -- -- 65 ============ ============ ============ ============ ============ ============ TOTAL $ 64,721 $ 28,390 $ 958 $ (10,922) $ (9,573) $ 73,574 ============ ============ ============ ============ ============ ============
The recoverability of amounts shown for deferred exploration is dependent upon the sale or discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development, and upon future profitable production or proceeds from the disposition thereof. The amounts deferred represent costs to be charged to operations in the future and do not necessarily reflect the present or future values of the properties. During the quarter ended June 30, 1997, the Company relinquished five prospecting licenses in the Upper Mazaruni and Five Stars areas in Guyana and, as a consequence, recognized property abandonment losses of $4.8 million during the period. Also during the second quarter of 1997, Guyanor recorded a property write-down charge of $0.9 million for the Regina Est property as Guyanor relinquished the property in the third quarter of 1997. In addition, the Company recorded a property write-down charge of $0.3 million for the Sunsas property area in Bolivia during the nine months ended September 30, 1997. The Company relinquished certain portions of the Sunsas property area in the third quarter of 1997. During the third quarter of 1997, the Company recorded property write-down charges for a portion of the San Simon property totaling $0.5 million and write-off of capitalized administrative costs for the Bolivian operations totaling $0.4 million. The Company closed its Bolivia office in the third quarter and suspended its Bolivia operations indefinitely. The Company, through PARC, recorded property write-down charges of $2.6 million during the third quarter, consisting of $0.4 million for impairment of certain diamond projects in the Ivory Coast and $2.2 million for impairment of a portion of the Dioulafoundou project area in Mali. In September, the Company and PARC were notified that African Selection Mining Corporation ("ASM") would discontinue funding exploration to earn a 50% interest in the Dioulafoundou project. Subsequently, PARC formally terminated its interest in d'Almeida Freres et Compagnie ("AFC") on September 9, 1997. This decision was based on the exploration results obtained by ASM. 6 9 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) (All tabular amounts in thousands of United States Dollars) (4) INVESTMENT IN OMAI GOLD MINES LIMITED Details regarding the Company's investment in the common and preferred share equity of Omai Gold Mines Ltd. and its share of equity losses not recorded for the year ended December 31, 1996 and the nine months ended September 30, 1997 are as follows:
Common Shares Preferred Shares ------------- ---------------- December 31, 1996 -- $ 3,279 Less: Preferred Share Redemption -- (1,014) Add: Premium on Preferred Share Redemption $ -- 554 ------------ ------------ March 31, 1997 $ $ 2,819 ------------ ------------ Less: Preferred Share Redemption -- (632) Add: Premium on Preferred Share Redemption -- 345 ------------ ------------ June 30, 1997 $ -- $ 2,532 ------------ ------------ Less: Preferred Share Redemptions -- (276) Add: Premium on Preferred Share Redemptions -- 151 ------------ ------------ September 30, 1997 $ $ 2,407 ============ ============
The Company's share of Accumulated Losses at: December 31, 1996 $(2,713) ======= September 30, 1997 $(1,299) =======
The Company recorded proceeds of $1.9 million from redemption of preferred shares during the nine months ended September 30, 1997. (5) CHANGES TO SHARE CAPITAL During the nine months ended September 30, 1997, 50,833 common shares were issued by the Company pursuant to exercised options previously granted under the Company's Employees' Stock Option plan for proceeds of $0.1 million. During the nine months ended September 30, 1997, 673,200 shares were issued for the exercise of all of the Company's outstanding Cdn$11.00 common share purchase warrants, providing proceeds of $5.4 million. On May 5, 1997, the Company sold through a prospectus offering 3,025,000 common shares at $7.50 per share for total proceeds of $22.7 million. The shares were issued under the Company's shelf prospectus in the United States and Canada. On August 8, 1997, the Company filed with the SEC 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 an additional $47,687,500 of its common shares, preferred shares, convertible debt securities and/or warrants. The Registration Statement also includes $52,312,500 in securities previously registered by the Company pursuant to a Registration Statement declared effective by the SEC on November 8, 1996. The Company filed an Amendment to this Registration Statement on October 2, 1997, and the Registration Statement was declared effective on October 2, 1997. On August 13, 1997, the Company filed with nine Canadian provincial securities commissions a short-form shelf prospectus, with respect to the proposed issuance by the Company from time to time of up to 12 million common shares and/or 12 million common share purchase warrants and a short-form shelf 7 10 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) (All tabular amounts in thousands of United States Dollars) prospectus with respect to the proposed issuance from time to time of up to $100 million of convertible debt securities. The Canadian prospectuses relate to the same securities being registered with the SEC. The Company filed the final Canadian prospectuses relating to these securities on October 2, 1997, and they became effective on October 7, 1997. (6) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES The financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in Canada which differ in certain respects from those principles that the Company would have followed had its financial statements been prepared in accordance with GAAP in the United States. Differences which materially affect these consolidated financial statements are: (a) For United States GAAP ("U.S. GAAP"), exploration and general and administrative costs related to projects are normally charged to expense as incurred. As such, the majority of costs charged to abandonment and impairment of mineral properties under Canadian GAAP would have been charged to earnings in prior periods under U.S. GAAP. Property acquisition costs are capitalized for both Canadian and U.S. GAAP. (b) For periods prior to May 15, 1992 (the "Amalgamation"), the Company's reporting currency was the Canadian dollar. Subsequent to the Company's Amalgamation and relocation of its corporate headquarters to the United States, the reporting currency was changed to the U.S. dollar. As such, for the financial statements for periods prior to May 15, 1992, the Company's financial statements were translated into U.S. dollars using a translation of convenience. U.S. GAAP requires translation in accordance with the current rate method. (c) Under U.S. GAAP, the investment in Omai Gold Mines Limited would have been written off in prior years and, therefore, the entire Omai Preferred Share Redemption would have been included in income. Under Canadian GAAP, a portion of the Omai Preferred Share Redemption is included in income with the remainder reducing the carrying value of the Company's preferred stock investment. (d) U.S. GAAP requires that compensation expense be recorded for the excess of the quoted market price over the option price granted to employees and directors under stock option plans. Under Canadian GAAP, no compensation expense is recorded for such awards. (e) Canadian GAAP allows classification of investments which are capable of reasonably prompt liquidation as current assets. As such, all of the Company's investments are included under the caption "short-term investments" on the balance sheet under current assets. U.S. GAAP requires classification as current or long term assets based upon the anticipated maturity date of such instruments. (f) The gains on subsidiary's issuance of common stock recorded under Canadian GAAP in respect of the Guyanor public offerings in 1995 and 1996 and the PARC private placements in 1995 and 1996 are not appropriate under U.S. GAAP. 8 11 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) (All tabular amounts in thousands of United States Dollars) (g) The Company eliminated its accumulated deficit through the Amalgamation (defined as a quasi-reorganization under U.S. GAAP) effective May 15, 1992. Under U.S. GAAP, the cumulative deficit was greater than the deficit under Canadian GAAP due to the write-off of certain deferred exploration costs described in (a) above. (h) Under U.S. GAAP, cash (and cash equivalents) includes bank deposits, money market instruments, and commercial paper with original maturities of three months or less. Canadian GAAP permits the inclusion of temporary investments with maturities greater than 90 days in cash. (i) Under U.S. GAAP, available-for-sale securities are recorded at fair value and unrealized gains and losses are recorded as a separate component of shareholders' equity. Fair value is determined by quoted market prices. (j) Under U.S. GAAP, accrued severance and social charges of $1.1 million resulting from suspension of alluvial mining operations at SOTRAPMAG would not have been recorded as of December 31, 1996, as the requirements for accrual under U.S. GAAP were not satisfied. Under U.S. GAAP, such costs and related accruals have been recorded in the first quarter of 1997. Had the Company followed U.S. GAAP, certain items on the statements of operations and balance sheets would have been reported as follows:
For the nine months ended September 30, 1997 September 30, 1996 ------------------ ------------------ Net loss under Canadian GAAP $ (14,426) $ (3,668) Net effect of the deferred exploration expenditures on loss for the period (a) (8,253) (12,770) Effect of recording compensation expense under stock option plans (d) (42) (79) Record loss for severance accruals (j) (1,115) -- Reversal of the gain on subsidiary's issuance of common stock (f) -- (2,001) Effect of Omai preferred share redemption (c) 871 -- ------------ ------------ Loss under U.S. GAAP before minority interest (22,965) (18,518) Adjustment to minority interest 500 1,613 ------------ ------------ Loss under U.S. GAAP $ (22,465) $ (16,905) ============ ============ Loss per share under U.S. GAAP $ (0.78) $ (0.67) ============ ============
9 12 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) (All tabular amounts in thousands of United States Dollars) The effect of the differences in accounting under Canadian GAAP and U.S. GAAP on the balance sheets and statements of cash flows are as follows: BALANCE SHEET
As of September 30, 1997 As of December 31, 1996 ------------------------ ----------------------- Canadian GAAP U.S. GAAP Canadian GAAP U.S. GAAP ------------- ------------ ------------- ------------ Cash (h) $ 17,635 15,636 $ 9,664 $ 9,664 Short term investments (e) 3,615 1,999 5,999 2,500 Other current assets 3,965 3,965 6,519 6,519 Restricted cash 765 765 2,015 2,015 Deferred exploration (a) 73,574 19,211 64,721 18,611 Investment in Omai Gold Mines Limited (c) 2,407 -- 3,279 -- Long-term investments (e) -- 3,615 -- 3,499 Other assets 1,498 1,498 4,086 4,087 ------------ ------------ ------------ ------------ Total Assets $ 103,459 $ 46,689 $ 96,283 $ 46,895 ============ ============ ============ ============ Liabilities 3,729 3,729 6,987 5,872 Minority interest (a) 8,248 7,610 11,202 11,064 Share capital, net of stock option loans (g) 153,756 150,924 125,942 123,068 Cumulative translation adjustments (b) -- 1,595 -- 1,595 Deficit (a) (c) (d) (f) (62,274) (117,169) (47,848) (94,704) ------------ ------------ ------------ ------------ Total Liabilities and Shareholders' Equity $ 103,459 $ 46,689 $ 96,283 $ 46,895 ============ ============ ============ ============
STATEMENTS OF CASH FLOWS
OPERATING INVESTING FINANCING NET CASH PROVIDED BY (USED IN): ACTIVITIES ACTIVITIES ACTIVITIES ---------- ---------- ---------- Canadian U.S. Canadian U.S. Canadian U.S. GAAP GAAP GAAP GAAP GAAP GAAP ------------ ------------ ------------ ------------ ------------ ------------ For the nine months ended September 30, 1997 $ (7,771) $ (23,722) $ (16,030) $ (240) $ 29,388 $ 29,433 For the nine months ended September 30, 1996 $ (6,819) $ (19,657) $ (16,401) $ (5,847) $ 32,700 $ 32,766
10 13 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) (All tabular amounts in thousands of United States Dollars) The statements of cash flows reflect the impact of the previously discussed adjustments (a) (c) (d) (f). Non-cash transactions impacting the statement of cash flows for the nine months ended September 30, 1997, totaled $0.3 million in financing activities. Non-cash items in investing activities were $0.1 million for the nine months ended September 30, 1996. (7) TRANSACTIONS WITH SUBSIDIARIES In May 1997, PARC entered into a demand revolving line of credit with the Company, whereby the Company would loan PARC up to $2.0 million. On June 27, 1997, the principal and interest on outstanding advances due from PARC totaling $2,018,591 were converted into 7,333,328 common shares of PARC at a conversion price of Cdn$0.38 per share. As a result, the Company's interest in PARC was increased to 63.89%. On October 1, 1997, the Company agreed, subject to regulatory approval, to acquire an additional 1,000,000 Class B common shares of Guyanor. (See Note 9) (8) COMMITMENTS AND CONTINGENCIES In June 1997, PARC's performance bond requirements under its Exploration License Agreement with the Government of Eritrea were reduced to $0.7 million. As a result, the bank guarantee and restricted cash collateral supporting the performance bond were reduced by $0.6 million. In August 1997, the remaining performance bond requirements were released by the Government of Eritrea and the bank guarantee and restricted cash collateral supporting the performance bond were reduced by a further $0.7 million. As of September 30, 1997, the Company had no remaining restricted cash balances relating to Eritrea. The Company's performance bond of $0.45 million for the benefit of the Ministry of Mines and Energy in Ethiopia guaranteeing the second year exploration program at the Dul project in Ethiopia expired on October 16, 1997. (See Note 9.) (9) SUBSEQUENT EVENTS The Company's Shelf Registration Statement on Form S-3, as amended, filed by the Company with the SEC was declared effective on October 2, 1997. The Company also filed final Canadian prospectuses on October 2, 1997. (See Note 5) On October 1, 1997, the Company agreed to acquire an additional 1,000,000 Class B common shares of Guyanor at a price of FF11.57 or Cdn$2.71. The total consideration of FF11,570,000 or Cdn$2,710,000 for the shares will be satisfied by reducing the equivalent amount of funds advanced to Guyanor by the Company. The Class B common shares were issued as of October 1, 1997, and the transaction resulted in an increase in the Company's interest in Guyanor from 68.5% to 69.3%. Guyanor is in the process of having these shares listed on the Nouveau Marche of Paris and the Toronto Stock Exchange. The Company has agreed not to sell or otherwise dispose of these shares for a period of six months. 11 14 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) (All tabular amounts in thousands of United States Dollars) The Company's performance bond of $0.45 million for the benefit of the Ministry of Mines and Energy in Ethiopia guaranteeing the second year exploration program at the Dul project in Ethiopia expired on October 16, 1997. The letter of credit collateralizing the performance bond expired on October 31, 1997, and the funds held as restricted cash collateral for the letter of credit are expected to be released in November 1997. 12 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the accompanying consolidated financial statements and related notes. The financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). For U.S. GAAP reconciliation see attached financial statement Note 6. CAUTIONARY STATEMENT FOR THE PURPOSES OF THE REFORM ACT The following contains certain forward-looking statements within the meaning of the Reform Act. Actual results, performance or achievements of the Company could differ materially from those projected in the forward-looking statements due to a number of factors, including those set forth under "Risk Factors" in the Company's Annual Report on Form 10-K. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise. (See "Special Note Regarding Forward-Looking Statements" above.) RESULTS OF OPERATIONS Nine Months Ended September 30, 1997 Compared to the Nine Months Ended September 30, 1996 During the third quarter of 1997, the Company recognized a net loss of $5.1 million or $0.17 per share as compared to a net loss of $2.0 million or $0.09 per share for the third quarter of 1996. During the third quarter of 1997, the Company recorded property abandonment and impairment charges of $3.5 million, including $2.6 million for portions of property areas in the Ivory Coast and Mali and $0.8 million related to property interests in Bolivia. There were no property abandonment or write down charges during the third quarter of 1996. For the nine months ended September 30, 1997, the Company recognized a net loss of $14.4 million or $0.50 per share, compared to a loss of $3.7 million or $0.15 per share for the first nine months of 1996. The increased loss in the 1997 period is primarily attributable to increased property write-downs in 1997 ($9.6 million) and gains recorded in 1996 which did not recur in 1997 ($0.9 million for recovery of abandonment losses and $2.0 million for gains on sale of subsidiary shares). These increased losses were offset by reduced production losses at Societe de Travaux Publics et de Mines Auriferes en Guyane, a subsidiary of Guyanor Ressources S.A. ("SOTRAPMAG") in 1997 as compared to 1996 ($1.2 million) and redemptions of Omai Gold Mines Ltd. preferred shares in 1997 which did not occur in 1996 ($1.1 million). During the first quarter of 1997, the Company, through Guyanor Ressources S.A. ("Guyanor"), began implementation of a program to discontinue the alluvial operations conducted at SOTRAPMAG. Mining operations were suspended on April 17, 1997 after receipt of regulatory approvals for SOTRAPMAG's closure plan. Alluvial gold production continued to the date of closure, with operating losses of $0.5 million incurred during the period from January 1 to April 17, 1997. Closure procedures, including land rehabilitation and company-provided outplacement services, were conducted during the quarter and are expected to be substantially complete by year end 1997. During the second quarter of 1997, SOTRAPMAG initiated a plan to sell certain equipment and machinery from the mine site. Sales of $0.5 million were completed as of September 30, 1997 with gains of $0.3 million recorded on the sales. 13 16 In the third quarter of 1997, the Company recorded impairment reserves for the remaining inventories and equipment at SOTRAPMAG which may have future recoverable values less than recorded amounts. The charge for this write-down was $1.5 million. The Company intends to continue efforts to sell equipment and other assets formerly used at the SOTRAPMAG operations. Any proceeds from such asset sales would be used to offset the impairment charges in future periods. As mining operations were discontinued in April 1997, there were no significant mining revenues during the third quarter of 1997 (as compared to $0.2 million for the third quarter of 1996). General and administrative expenditures of $2.1 million (as compared to $1.8 million in the third quarter of 1996) reflected the Company's continued support of the portfolio of exploration projects in South America and Africa and the cost of maintaining two publicly traded subsidiaries. Depreciation expense in the third quarter of 1997 decreased by $0.1 million as compared to the third quarter of 1996 as a result of the shut down of the SOTRAPMAG mine. Exploration expense of $0.3 million during the third quarter of 1997 (compared to $0.1 million during the third quarter of 1996) resulted primarily from project generation expenditures on potential new areas of interest, as well as additional expenditures on properties previously written-off. Omai Gold Mines Limited ("OGML"), in which the Company maintains a 30% common share equity interest, reported a net loss of $0.4 million for the third quarter of 1997 and net income of $5.2 million for the nine months ended September 30, 1997, compared to net income of $2.6 million in the third quarter of 1996 and $1.4 million for the nine months ended September 30, 1996. During the nine months ended September 30, 1997, OGML produced 255,430 ounces of gold, compared to 162,117 ounces during the first nine months of 1996. Cash operating costs for the third quarter of 1997 were $257.74 per ounce, compared to $232.83 per ounce for the corresponding period in 1996. Production during the first nine months of 1996 was adversely impacted by the tailings dam failure in August 1995, with production resuming in February 1996 and returning to full capacity in June 1996. The Company recorded Class "I" preferred share redemptions from OGML of $1.1 million for the nine months ended September 30, 1997. There were no redemptions of Class "I" preferred shares during the nine months ended September 30, 1996. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1997, the Company held cash and short term investments of $21.3 million ($19.0 million as of September 30, 1996 and $15.7 million as of December 31, 1996) and working capital of $21.6 million ($15.1 million as of September 30, 1996, and $15.3 million as of December 31, 1996). The increase in cash resources and working capital since September 30, 1996, resulted from proceeds from the issuance of Guyanor shares in conjunction with the listing of the Nouveau Marche in the fourth quarter of 1996 ($8.9 million), proceeds from the exercises of the Company's Cdn$11.00 warrants in the first quarter of 1997 ($5.4 million) and proceeds from the Company's common share offering in May 1997 ($22.7 million), offset by expenditures on the Company's exploration activities during the period. Cash used in investing activities of $16.0 million for the nine months ended September 30, 1997 (as compared to $16.4 million for the nine months ended September 30, 1996) consisted primarily of expenditures on exploration projects which totaled $18.4 million (compared to $15.7 million for the nine months ended September 30, 1996), including the Gross Rosebel project in Suriname ($3.8 million net of joint venture recoveries) and the Andorinhas project in Brazil ($4.0 million), offset by Omai preferred share redemptions of $1.9 million. 14 17 Cash provided by financing activities of $29.4 million for the nine months ended September 30, 1997 decreased by $3.3 million as compared to $32.7 million for the nine months ended September 30, 1996. The decrease results from offerings by the Company's subsidiaries in the first nine months of 1996 which did not recur in 1997. Share capital increased by $27.8 million for the nine months ended September 30, 1997 compared with $23.3 million during the nine months ended September 30, 1996, reflecting proceeds from warrant exercises and the May 1997 common stock offering. On August 8, 1997, the Company filed a shelf registration statement on Form S-3 with the SEC (the "Registration Statement"), with respect to the proposed issuance by the Company from time to time of up to an additional $47,687,500 of its common shares, preferred shares, convertible debt securities and/or warrants. The Registration Statement also includes $52,312,500 in securities previously registered by the Company pursuant to a Registration Statement declared effective by the SEC on November 8, 1996. The Company filed an Amendment to this Registration Statement on October 2, 1997, and the Registration Statement was declared effective on October 2, 1997 On August 13, 1997, the Company filed with nine Canadian provincial securities commissions a short-form shelf prospectus, with respect to the proposed issuance by the Company from time to time of up to 12 million common shares and/or 12 million common share purchase warrants and a short-form shelf prospectus with respect to the proposed issuance from time to time of up to $100 million of convertible debt securities. The Canadian prospectuses relate to the same securities being registered with the SEC. The Company filed the final Canadian prospectuses relating to these securities on October 2, 1997, and they became effective on October 7, 1997. In response to continuing weak gold prices, which could impact the Company's ability to raise capital through the equity markets, management implemented a program in July 1997 to conserve cash by reducing administrative expenses and exploration spending. The Company's exploration efforts continue to focus on advanced stage projects and the higher priority earlier stage projects. Management has assessed and prioritized exploration projects in order to ensure continued progress on the most promising projects in the Company's portfolio over a prolonged period of time should the currently weak gold environment persist. The objective of the revised budgets is to fund those programs that the Company believes offer the greatest potential for meaningful results and that will generate new resources and reserves. As of September 30, 1997, the Company had approximately $22.0 million in cash and restricted cash. The Company's consolidated exploration spending for the fourth quarter of 1997 is budgeted to be $8.0 million, with recoveries from joint venture partners of $3.6 million, resulting in net exploration expenditures totaling $4.4 million. The Company expects that its existing cash resources will be sufficient to fund these expenditures. The Company's primary efforts for the remainder of 1997 are planned to focus on six projects: Andorinhas in Brazil, Yaou, Dorlin, St-Elie and Paul Isnard in French Guiana, and Eagle Mountain in Guyana. Development of the Gross Rosebel project in Suriname has been deferred pending receipt of the necessary government approvals, resolution of certain issues related to development and improved gold prices. Work is continuing on an update of the feasibility study which is expected to be completed in the fourth quarter of 1997. Work is also expected to continue on gold anomalies established through joint ventures with BHP in Suriname and Guyana, as well as programs recently initiated on the Dachine diamond project in French Guiana and the Five Stars diamond projects in northwestern Guyana. Most other earlier stage projects have been put on care and maintenance while awaiting improved conditions, while seeking joint venture partners where appropriate. Certain early stage projects have been reassessed and those which do not warrant further work abandoned (see Results of Operations). 15 18 Africa (Pan African Resources Corporation) Total exploration and acquisition expenditures in Africa for the third quarter of 1997 amounted to $0.7 million (compared to $1.8 million during the third quarter of 1996) and $2.4 million for the first nine months of 1997 (compared to $4.5 million for the first nine months of 1996). Expenditures in 1997 primarily reflect exploration activities in the Ivory Coast, Kenya and Eritrea. General and administrative expenditures for the third quarter of 1997 totaled $0.2 million (compared to $0.2 million for the third quarter of 1996) and $0.5 million for the first nine months of 1997 (compared to $0.9 million for the nine month period ended September 30, 1996). PARC recorded exploration expense of $0.1 million and $0.5 million during the third quarter and nine months ended September 30, 1997, respectively, (as compared to $46,000 and $0.1 million for the third quarter and nine months ended September 30, 1996, respectively) representing preliminary project reconnaissance and additional expenditures for projects previously written down. The Company, through PARC, recorded property write-down charges of $2.6 million during the third quarter, consisting of $0.4 million for impairment of certain diamond projects in the Ivory Coast and $2.2 million for impairment of a portion of the Dioulafoundou project area in Mali. In September, the Company and PARC were notified that African Selection Mining Corporation ("ASM") would discontinue funding exploration to earn a 50% interest in the Dioulafoundou project. Subsequently, PARC formally terminated its interest in d'Almeida Freres et Compagnie ("AFC") on September 9, 1997. This decision was based on the exploration results obtained by ASM. In May 1997, PARC entered into a demand revolving line of credit with the Company, whereby the Company would loan PARC up to $2.0 million. On June 27, 1997, the principal and interest on outstanding advances due from PARC totaling $2,018,591 were converted into 7,333,328 common shares of PARC at a conversion price of Cdn$0.38 per share. As a result, the Company's interest in PARC as of June 30, 1997 was increased to 63.89%. On June 5, 1997, PARC's performance bond requirements under its Exploration License Agreement with the Government of Eritrea were reduced from $1.3 million to $0.7 million. As a result, the bank guarantee and restricted cash collateral supporting the performance bond were reduced by $0.6 million. In August 1997, the remaining performance bond requirements were released by the Government of Eritrea and the bank guarantee and restricted cash collateral supporting the performance bond were reduced by a further $0.7 million. As of September 30, 1997, the Company had no remaining restricted cash balances relating to Eritrea. The Company's performance bond of $0.45 million for the benefit of the Ministry of Mines and Energy in Ethiopia guaranteeing the second year exploration program at the Dul project in Ethiopia expired on October 16, 1997. The letter of credit collateralizing the performance bond expired on October 31, 1997, and the funds held as restricted cash collateral for the letter of credit are expected to be released in November 1997. French Guiana (Guyanor Ressources S.A.) Total exploration expenditures by Guyanor for the third quarter of 1997 amounted to $2.9 million, offset by joint venture recoveries of $2.3 million as compared to $2.6 million in expenditures and $1.7 million in joint venture recoveries in the third quarter of 1996. Total exploration expenditures and joint venture recoveries by Guyanor for the nine months ended September 30, 1997 were $8.0 million and $6.6 16 19 million, respectively (compared to $6.1 million in expenditures and $5.0 million in joint venture recoveries for the first nine months of 1996). Activities in French Guiana focused primarily on further work at the St-Elie/Dieu-Merci, Paul-Isnard/Eau Blanche and Yaou/Dorlin properties. General and administrative expenditures for Guyanor which were not reimbursed by joint venture partners amounted to $0.5 million and $1.4 million for the quarter and nine months ended September 30, 1997, respectively (compared to $0.4 million and $1.5 million for the three and nine months ended September 30, 1996, respectively). During the nine months ended September 30, 1997, Guyanor recorded property write-downs of $0.9 million for the Regina Est property as Guyanor relinquished the property in the third quarter of 1997. Guyanor began contributing its 50% share of expenditures at Yaou / Dorlin in September 1997. On October 9, 1997, the Company and Guyanor announced that the Company has agreed to acquire an additional 1,000,000 Class B common shares of Guyanor at a price of FF11.57 or Cdn$2.71. The total consideration of FF11,570,000 or Cdn$2,710,000 for the shares will be satisfied by reducing the equivalent amount of funds advanced to Guyanor by the Company. The Class B common shares were issued on October 30, 1997, and the transaction resulted in an increase in the Company's interest in Guyanor from 68.5% to 69.3%. Guyana Exploration and acquisition expenditures in the third quarter of 1997 in Guyana amounted to $1.1 million (compared to $0.7 million during the third quarter of 1996) and $2.4 million for the nine months ended September 30, 1997 (compared to $2.9 million for the first nine months of 1996). Joint venture recoveries from the Company's BHP projects totaled $1.0 million for the nine months ended September 30, 1997, compared to recoveries of $0.1 million for the period ended September 30, 1996. Activities during 1997 in Guyana have focused primarily on the Five Stars gold and diamond reconnaissance areas and the Eagle Mountain project. During the nine months ended September 30, 1997, the Company relinquished five prospecting licenses in the Upper Mazaruni and Five Stars areas in Guyana and, as a consequence, recognized property abandonment losses of $4.8 million during the period. Suriname During 1997, exploration and acquisition expenditures in Suriname have focused principally on the Gross Rosebel gold project in joint venture with Cambior Inc. ("Cambior"). Total spending in Suriname in the third quarter of 1997 of $3.1 million was offset by recoveries from joint venture partners of $2.4 million (compared to $3.5 million in expenditures and $2.3 million in recoveries for the third quarter of 1996), as Cambior has met its earn-in requirements at Gross Rosebel in April 1996 and all subsequent expenditures are shared equally. Exploration expenditures for the first nine months of 1997 of $10.6 million (compared to $8.6 million for the nine months ended September 30, 1996) were offset by $4.2 million in joint venture recoveries (compared to $4.7 million in recoveries for the first nine months of 1996). Southern Star Resources Ltd. Exploration and acquisition expenditures by Southern Star for the third quarter of 1997 were $1.5 million ($1.4 million for the third quarter of 1996) and $6.0 million for the first nine months of 1997 17 20 (compared to $3.3 for the first nine months of 1996). Exploration work focused primarily on the Andorinhas and Abacaxis properties in Brazil. The Company recorded a property write-down charge of $0.3 million for the Sunsas property area in Bolivia during the nine months ended September 30, 1997. In the third quarter of 1997, the Company relinquished certain portions of the Sunsas property area. Also in the third quarter of 1997, the Company recorded property write-down charges for a portion of the San Simon property totaling $0.5 million and write-off of capitalized administrative costs for the Bolivian operations totaling $0.4 million. The Company closed its Bolivia office in the third quarter and suspended its Bolivia operations indefinitely. 18 21 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There are currently no material pending legal proceedings to which the Company or any of its subsidiaries is a party or to which any of its properties or those of any of its subsidiaries is subject. The Company and its subsidiaries are, however, engaged in routine litigation incidental to their business. No material legal proceedings involving the Company are pending, or, to the knowledge of the Company, contemplated, by any governmental authority. The Company is not aware of any material events of noncompliance with environmental laws and regulations. The exact nature of environmental control problems, if any, which the Company may encounter in the future cannot be predicted, primarily because of the changing character of environmental regulations that may be enacted within foreign jurisdictions. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 27 Financial Data Schedule (b) The Company filed with the Securities and Exchange Commission on September 23, 1997, a Form 8-K concerning recent developments of the Company including (i) drilling results on the Andorinhas gold project in Brazil, (ii) the completion of an offering of 3,025,000 common shares of the Company, (iii) the increase of the estimated mining reserves at Gross Rosebel in Suriname, (iv) the joint announcement with Pan African Resources Corporation ("PARC"), its approximately 58% owned subsidiary, of the exploration update on the Ndori property in Kenya, (v) the conversion of a US$2 million, plus interest, loan from the Company to PARC into 7,333,328 common shares of PARC, (vi) the resignation of Jean-Pierre Lefebvre as director of the Company, (vii) core drilling results from the St-Elie and Dieu-Merci projects in French Guiana, (viii) the estimated mineralized inventory at the Yaou and Dorlin projects in French Guiana, (ix) the implementation of a program for the second half of 1997 to conserve cash, and (x) the announcement by Guyanor Ressources S.A., the Company's 68% owned public subsidiary, that 10 core holes were completed at the Paul-Isnard project in French Guiana. 19 22 SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Golden Star Resources Ltd. By: /s/ David A. Fennell ------------------------------------------- David A. Fennell President and Chief Executive Officer By: /s/ Gordon J. Bell ------------------------------------------- Gordon J. Bell Vice President and Chief Financial Officer Date: November 14, 1997 20 23 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ----------- 27 FINANCIAL DATA SCHEDULE
EX-27 2 FINANCIAL DATA SCHEDULE
5 1000 3-MOS DEC-31-1997 JUL-01-1997 SEP-30-1997 21,250 0 3,026 0 569 25,215 3,105 (1,723) 103,459 3,625 0 0 0 157,767 (4,011) 103,459 4 350 9 7,328 0 0 0 (5,120) 0 (5,120) 0 0 0 (5,120) (0.17) 0
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