Golden Star Resources Ltd.

Golden Star Resources Ltd.

May 31, 2005 15:53 ET

Golden Star Reports on Ghanaian Government Nationwide Action to Stop Illegal Mining

DENVER--(CCNMatthews - May 31, 2005) -

Golden Star Resources Ltd. (Amex: GSS) (TSX: GSC) today confirmed developments concerning illegal mining on its property in Ghana. Following several months of consultation, a decision was taken in February by the Ghana Government and other stakeholders to stop illegal mining nationwide after an appropriate notice period. The Company has in recent years experienced an increase in illegal mining activity on its Prestea property, where high-grade veins extend to surface, involving several thousand illegal miners. An implementation program has been devised for Prestea.

As part of the program, the Government announced a plan to facilitate existing illegal miners, also known as Galamsey, to become legitimate small-scale miners and be granted permits on properties specifically allocated by the Ghana Minerals Commission for such purposes, which are outside of the Company's property holdings.

The Government and its agencies have carried out educational programs for the illegal miners and the nearby communities relating to the negative social, health and environmental impacts of illegal mining. The program also makes illegal miners aware of the Government's small-scale mining initiative and educates them on environmental and safety issues.

Following is copy of a press statement entitled "Galamsey Activities on Bogoso Concession at Prestea" issued by the Ministry of Lands, Forestry and Mines on and prominently disseminated through the Ghanaian national press. The statement indicates a final deadline of May 31, 2005, to cease illegal mining in the Prestea area, after which it is anticipated that the Ghana security forces will close down any remaining Galamsey operations. Government has recently closed down some Galamsey pits at AngloGold Ashanti's Obuasi mine and further action to close down Galamsey activities on other mining properties in Ghana is expected.

In addition to the theft of gold, we believe that illegal mining has a number of negative impacts on the Company's employees, the local communities, the country's economy, as well as on the Galamsey themselves and their families:

-- Foremost is the environmental and health concern of the uncontrolled and indiscriminate use of mercury to recover the gold. Mercury represents a serious health hazard to the Galamsey, their families, and the local communities.

-- Personal safety is a major concern because the Galamsey take very few precautions as they mine on surface and tunnel underground, in some cases hundreds of feet. This work is hazardous for the Galamsey, but the unplotted workings also create a hazard to our employees and the community who can drop into trenches and shafts not visible from the surface and into workings that are not marked underground.

-- The social impacts include large concentrations of people involved in Galamsey housed in temporary shelters and camps without sanitation facilities. This can lead to an increase in the incidence of disease, including HIV/AIDS, and other social problems, including prostitution and a general breakdown in law and order. Currently, Ghana has one of the lowest incidence rates of HIV/AIDS in sub-Saharan Africa.

-- The law and order impacts also include the frequent illegal and uncontrolled use of explosives, which are often illegally obtained and have been associated with a rise in thefts from legitimate explosives users.

-- The economic impact on Ghana includes the direct loss of taxes and royalties.

Although illegal mining has yet to be stopped, Golden Star expresses its gratitude to the Government of Ghana and its agencies for their support and timely intervention to minimize the impact on the resource and reserve potential at the Bogoso/Prestea Mine.

Company Profile

Golden Star holds a 90% equity interest in the Bogoso/Prestea and Wassa open-pit gold mines in Ghana. In addition, the Company has an 81% interest in the currently inactive Prestea Underground mine in Ghana, as well as gold exploration interests elsewhere in West Africa and in the Guiana Shield of South America. Golden Star has approximately 142.4 million common 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. 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 anticipated implementation of a program to stop illegal mining on the Company's Prestea property, the May 31, 2005, deadline to cease illegal mining in the Prestea area, anticipated action by Ghana security forces to close down illegal mining operations and effects of illegal mining operations. Factors that could cause results to differ materially could include refusal of the illegal miners to comply with the May 31, 2005, deadline and failure of the government to take necessary action to stop illegal mining on the Prestea property. Please refer to the discussion of these and other factors in our Form 10-K for 2004.



Golden Star Resources (Bogoso Gold Limited) has a gold concession at Prestea, in the Wassa West District of the Western Region. For the past two years, illegal miners have invaded this concession, making it difficult for the company to carry out its planned programs.

Following persistent appeals to government by the Company, the Western Regional Coordinating Council together with the National Security convened a meeting of all stakeholders including Management of the Golden Star Resources, Chiefs and Elders of the Region and leaders of the Galamsey operators in Sekondi in February 2005 to deliberate on the issue. The 31st March 2005 was set for illegal miners to leave the Company's concession, or be driven away. Considering the number of people involved in the illegal mining (estimated at over 2,000), Government decided that to show a "Human Face" to the exercise by ensuring that some areas were identified to enable the illegal miners who were interested in becoming small scale miners to move to.

To this end, the Honorable Minister of Lands, Forestry & Mines had separate meetings with Management of the Bogoso Gold Limited (April 4 & 5 2005), the Chief and Elders of Prestea (April 5 2005) and leaders of illegal miners (April 5 2005).

The illegal miners were informed that the Minerals Commission was identifying areas which would be made available to them within one month. The miners were therefore to form cooperatives or groups, and register at the Minerals Commission office at Tarkwa. I am happy to announce that three (3) areas have been identified at:

-- Japa in the Western Region;

-- Adjumadium in the Western Region; and

-- Winneba area in the Central Region.

These three identified areas can host nearly 600 cooperatives or groups of at least 10 members each. This exercise is on-going and more areas will be identified and reserved for small scale gold mining. I wish to state that, having made these areas available, it is high time all illegal miners working on Golden Star Concession took advantage of the opportunity created and vacated Bogoso Gold Limited concessions by May 31 2005. Government will assist the Company to ensure that no illegal miner remains on the Concession after this date.

Program Implementation

The following measures have been put in place to assist all those who wish to acquire small scale mining concession at the three areas.

1. A list of those who have registered has been sent to each of the Minerals Commission offices at;

-- Assin Fosu, for all those who want concessions at Winneba area;

-- Bibiani for all those who want concessions at Adjumadium; and

-- Tarkwa and Asankragua for all those who want concession at Japa.

Interested group leaders are requested to see the Minerals Commission staff at these offices to be assisted to demarcate areas of interest to them.

2. One month after the demarcation and commencement of operations, the, Group leaders shall regularize their operations by forwarding to the Minerals Commission their applications to acquire areas they have demarcated. The Minerals Commission and the Mines Department offices in the various areas will educate applicants on the precise procedures and documents that accompany their applications.

3. As a matter of urgency, the Minerals Commission is to liaise with the three District Assemblies where the areas are located to setup small scale gold mining committees in accordance with section 10 of the small scale gold mining Law, PNDC 218. The Committees shall assist the Commission's officers to effectively monitor and regulate activities of small scale miners in the areas in question.

4. I take this opportunity to express my profound gratitude to the Hon. Western Regional Minister, the Western Regional Coordinating Council, the National Security Council and the Wassa West District Administration for their efforts in sensitizing the illegal miners on this exercise. I also thank the Chiefs and Elders of Prestea -- Hemeng and the leaders of the galamsayers for their cooperation. I am also grateful for cooperation and patience exhibited by the management of Golden Star Resources.

5. Finally, I would like to assure small scale miners that Government intends to establish processing centres at the designated areas to help them improve up on their operations. They are therefore expected to cooperate fully to ensure the success of this exercise.




Contact Information

  • Golden Star Resources Ltd., Denver
    Peter Bradford, 303-894-4613 or 800-553-8436
    President and CEO
    Allan Marter, 303-894-4631 or 800-553-8436
    Chief Financial Officer