SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GOLDEN STAR RESOURCES LTD.
--------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to whom transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[Graphic Omitted]
MANAGEMENT INFORMATION CIRCULAR
FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF
COMMON SHAREHOLDERS OF
GOLDEN STAR RESOURCES LTD.
THIS NOTICE OF MEETING AND MANAGEMENT INFORMATION CIRCULAR IS FURNISHED IN
CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT OF GOLDEN STAR RESOURCES LTD.
OF PROXIES TO BE VOTED AT THE ANNUAL GENERAL AND SPECIAL MEETING OF ALL COMMON
SHAREHOLDERS.
TO BE HELD AT:
TSX Broadcast & Conference Centre - Gallery Facility
130 King Street West
Toronto, Ontario, Canada M5X 1J2
On Friday, May 26, 2006
at 1:30 p.m. (Eastern Time)
NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING
OF SHAREHOLDERS OF
GOLDEN STAR RESOURCES LTD.
Littleton, Colorado
NOTICE IS HEREBY GIVEN that the Annual General and Special Meeting (the
"Meeting") of shareholders of Golden Star Resources Ltd. (the "Company") will be
held at 1:30 p.m. (Toronto time) on Friday, May 26, 2006 at the TSX Broadcast &
Conference Centre - Gallery Facility, Toronto, Ontario, Canada, M5X 1J2 for the
following purposes:
1. to receive the report of the directors to the shareholders and the
consolidated financial statements of the Company, together with the
auditors' report thereon, for the fiscal year ended December 31, 2005;
2. to elect directors until the next annual general meeting;
3. to appoint auditors to hold office until the next annual general meeting at
a remuneration to be fixed by the Board of Directors;
4. to consider and, if deemed advisable, to approve and confirm an amendment
to the Company's By-Law Number One to change the provisions regarding
setting a record date for shareholder meetings to conform to the current
provisions of the Canada Business Corporations Act, the details of which
are contained under the heading "Particulars of Matters to be Acted Upon -
Approval of the By-law Resolution" in the accompanying Management
Information Circular; and
5. to transact such other business as may properly come before the Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on March 28, 2006 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting and at any adjournment thereof. Accompanying this Notice of
Meeting are a (i) Management Information Circular, (ii) form of proxy, (iii)
reply card for use by shareholders who wish to receive the Company's interim
financial statements, and (iv) reply card for use by shareholders who wish to
consent to the electronic delivery of certain documents of the Company. The
Company's 2005 Annual Report containing the audited comparative financial
statements of the Company as at and for the year ended December 31, 2005 and the
related management's discussion and analysis of financial condition and results
of operations also accompany this Notice of Meeting.
If you are a registered shareholder of the Company and do not expect to attend
the Meeting in person, please promptly complete and sign the enclosed proxy form
and return it in the self-addressed envelope for receipt by no later than 5:00
p.m. (Toronto time) on May 24, 2006. If you receive more than one proxy form
because you own common shares registered in different names or addresses, each
proxy form should be completed and returned.
If you are a non-registered shareholder of the Company and receive these
materials through your broker or another intermediary, please complete and sign
the materials in accordance with the instructions provided to you by such broker
or other intermediary.
Dated at Littleton, Colorado, this 7th day of April, 2006.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Allan J. Marter
Senior Vice President,
Chief Financial Officer and Secretary
TABLE OF CONTENTS
Page
SOLICITATION OF PROXIES........................................................1
APPOINTMENT AND REVOCATION OF PROXIES..........................................2
ADVICE TO BENEFICIAL SHAREHOLDERS..............................................2
VOTING OF PROXIES..............................................................3
VOTING SHARES AND SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT...............................................4
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS...............................6
A. Compensation of Directors............................................6
B. Executive Officers and Compensation of Officers......................7
C. Compensation Committee Report on Executive Compensation.............15
D. Performance Graph and Table.........................................17
AUDIT COMMITTEE REPORT........................................................18
STATEMENT OF CORPORATE GOVERNANCE PRACTICES...................................18
PRINCIPAL ACCOUNTING FIRM FEES................................................26
LIABILITY INSURANCE...........................................................27
INDEBTEDNESS OF DIRECTORS AND OFFICERS........................................27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................27
PARTICULARS OF MATTERS TO BE ACTED UPON.......................................28
(a) Report to Shareholders..............................................29
(b) Election of Directors...............................................29
(c) Appointment of Auditor..............................................31
(d) Approval of the By-Law Resolution...................................31
AVAILABILITY OF DOCUMENTS.....................................................33
ACCOMPANYING FINANCIAL INFORMATION AND INCORPORATION BY REFERENCE.............33
2005 ANNUAL REPORT............................................................34
2007 SHAREHOLDER PROPOSALS....................................................34
OTHER MATTERS.................................................................34
GENERAL.......................................................................34
APPROVAL......................................................................35
-i-
GOLDEN STAR RESOURCES LTD.
10901 West Toller Drive, Suite 300
Littleton, Colorado, USA 80127
MANAGEMENT INFORMATION CIRCULAR
-------------------------------
FOR THE ANNUAL GENERAL AND SPECIAL MEETING
OF COMMON SHAREHOLDERS
MAY 26, 2006
ALL AMOUNTS OF MONEY WHICH ARE REFERRED TO IN THIS MANAGEMENT INFORMATION
CIRCULAR ARE EXPRESSED IN LAWFUL MONEY OF THE UNITED STATES UNLESS OTHERWISE
SPECIFIED.
NOTE: Shareholders who do not hold their common shares in their own name, as
registered shareholders, should read "Advice to Beneficial Shareholders" for an
explanation of their rights.
The information in this Management Information Circular is as of March 28, 2006
unless otherwise indicated.
SOLICITATION OF PROXIES
-----------------------
THIS MANAGEMENT INFORMATION CIRCULAR IS PROVIDED IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY THE MANAGEMENT OF GOLDEN STAR RESOURCES LTD. (the
"Corporation") for the annual general and special meeting of the shareholders of
the Corporation (the "Meeting") to be held on Friday, May 26, 2006, at 1:30 p.m.
(Toronto time) in the TSX Broadcast & Conference Centre - Gallery Facility, 130
King Street West, Toronto, Ontario, Canada M5X 1J2 or at any adjournment thereof
for the purposes set forth in the accompanying Notice of Meeting. This
Management Information Circular and the accompanying form of proxy ("Proxy") are
expected to be sent to the shareholders on or about April 25, 2006.
Although it is expected that the solicitation of proxies will be primarily by
mail, proxies may also be solicited personally or by telephone, telegraph or
personal interview by regular employees of the Corporation, at a nominal cost to
the Corporation. In accordance with applicable laws, arrangements have been made
with brokerage houses and other intermediaries, clearing agencies, custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial
owners of the common shares held of record by such persons and the Corporation
may reimburse such persons for reasonable fees and disbursements incurred by
them in doing so. The costs thereof will be borne by the Corporation.
APPOINTMENT AND REVOCATION OF PROXIES
-------------------------------------
The persons named in the enclosed Proxy, Peter J. Bradford, President and Chief
Executive Officer of the Corporation, or failing him, Allan J. Marter, Senior
Vice President, Chief Financial Officer and Secretary of the Corporation, have
been designated by the directors of the Corporation and have indicated their
willingness to represent as proxy each shareholder who appoints them. A
SHAREHOLDER HAS THE RIGHT TO DESIGNATE A PERSON (WHO NEED NOT BE A SHAREHOLDER)
OTHER THAN PETER J. BRADFORD OR ALLAN J. MARTER, BEING THE MANAGEMENT DESIGNEES,
TO REPRESENT HIM OR HER AT THE MEETING. Such right may be exercised by inserting
in the space provided for that purpose on the Proxy the name of the person to be
designated and deleting therefrom the names of the management designees, or by
completing another proper form of proxy. Such shareholder should notify the
nominee of the appointment, obtain a consent to act as proxy and provide
instructions on how the shareholder's common shares ("Common Shares") of the
Corporation are to be voted. In any case, the form of proxy should be dated and
executed by the shareholder or an attorney authorized in writing, with proof of
such authorization attached where an attorney executed the proxy form. A form of
proxy will not be valid for the Meeting or any adjournment thereof unless it is
completed and delivered to Attention: Proxy Department, CIBC Mellon Trust
Company, #6, 200 Queens Quay East, Toronto, Ontario, Canada M5A 4K9, no later
than 5:00 p.m. (Toronto time) on Wednesday, May 24, 2006 or, if the Meeting is
adjourned, no later than 5:00 p.m. (Toronto time) on the business day
immediately prior to the day of the reconvening of the adjourned Meeting. Late
proxies may be accepted or rejected at any time prior to the commencement time
of the Meeting by the Chairman of the Meeting in his discretion and the Chairman
is under no obligation to accept or reject any particular late proxy.
In addition to revocation in any other manner permitted by law, a shareholder
who has given a proxy may revoke it at any time before it is exercised, by
instrument in writing executed by the shareholder or by his attorney authorized
in writing and deposited either at the registered office of the Corporation,
being Suite 3700, Toronto Dominion Bank Tower, 66 Wellington Street West, P.O.
Box 20, Toronto Dominion Centre, Toronto, Ontario, Canada, M5K 1N6, Attention:
Golden Star Resources Ltd. at any time up to and including the last business day
preceding the day of the Meeting, or any adjournment thereof, at which the proxy
is to be used, or with the Chairman of the Meeting on the day of the Meeting or
any adjournment thereof, before any votes in respect of which the proxy is to be
used shall have been taken. In addition, a proxy may be revoked by the
shareholder personally attending at the Meeting, registering with the
scrutineers and voting his Common Shares.
ADVICE TO BENEFICIAL SHAREHOLDERS
---------------------------------
The information set forth in this section is of significant importance to many
shareholders of the Corporation as a substantial number of shareholders do not
hold their Common Shares in their own names. Shareholders of the Corporation who
do not hold their Common Shares in their own names (referred to herein as
"Beneficial Shareholders") should note that only proxies deposited by
shareholders whose names appear on the records of the Corporation as the
registered holders of Common Shares can be recognized and acted upon at the
Meeting. If Common Shares are listed in an account statement provided to a
shareholder by a broker, then, in almost all cases, those shares will not be
registered in the shareholder's name on the records of the Corporation. Such
2
shares will more likely be registered under the name of the shareholder's broker
or an agent or nominee of that broker. In Canada, the vast majority of such
shares are registered under the name of CDS & Co. (the registration name for The
Canadian Depositary for Securities Limited, which acts as nominee for many
Canadian brokerage firms). Common Shares of the Corporation held by brokers or
their agents or nominees may in certain instances be voted (for or against
resolutions) upon the instructions of the Beneficial Shareholder. Without
specific instructions, a broker and its agents and nominees are prohibited from
voting shares for the broker's clients. Therefore, Beneficial Shareholders
should ensure that instructions respecting the voting of their Common Shares are
communicated to the appropriate person.
Applicable regulatory rules require intermediaries/brokers to seek voting
instructions from Beneficial Shareholders in advance of shareholders' meetings.
Every intermediary/broker has its own mailing procedures and provides its own
return instructions to clients, which should be carefully followed by Beneficial
Shareholders in order to ensure that their Common Shares are voted at the
Meeting. Often, the form of proxy supplied to a Beneficial Shareholder by its
broker (or the agent of the broker) is identical to the form of proxy provided
to registered shareholders. However, its purpose is limited to instructing the
registered shareholder (the broker or agent or nominee of the broker) how to
vote on behalf of the Beneficial Shareholder. The majority of brokers now
delegate responsibility for obtaining instructions from clients to ADP Investor
Communications ("ADP"). ADP typically applies a special sticker to the proxy
forms, mails those forms to the Beneficial Shareholders and asks Beneficial
Shareholders to return the proxy forms to ADP. ADP then tabulates the results of
all instructions received and provides appropriate instructions respecting the
voting of shares to be represented at the meeting. A Beneficial Shareholder
receiving a proxy with an ADP sticker on it cannot use that proxy to vote Common
Shares directly at the Meeting - the proxy must be returned to ADP well in
advance of the Meeting in order to have the Common Shares voted.
Although a Beneficial Shareholder may not be recognized directly at the Meeting
for the purposes of voting Common Shares registered in the name of his broker
(or an agent or nominee of the broker), a Beneficial Shareholder may attend the
Meeting as proxyholder for the registered shareholder and vote such Common
Shares in that capacity. Beneficial Shareholders who wish to attend the Meeting
and indirectly vote their Common Shares as proxyholder for the registered
shareholder should enter their own names in the blank space on the form of proxy
provided to them and return the same to their broker (or the broker's agent or
nominee) in accordance with the instructions provided by such broker (or agent
or nominee), well in advance of the Meeting.
All references to shareholders in this Management Information Circular and the
accompanying Notice of Meeting and Proxy are to shareholders of record unless
specifically stated otherwise. Where documents are stated to be available for
review or inspection, such items will be shown upon request to registered
shareholders who produce proof of their identity.
VOTING OF PROXIES
-----------------
The persons named in the enclosed Proxy are directors and/or officers of the
Corporation who have indicated their willingness to represent as proxy the
shareholders who appoint them. Each shareholder may instruct his proxy how to
vote his Common Shares by completing the blanks on the Proxy.
3
All Common Shares represented at the Meeting by properly executed proxies will
be voted (including the voting on any ballot), and where a choice with respect
to any matter to be acted upon has been specified in the Proxy, the Common
Shares represented by the Proxy will be voted or withheld from voting in
accordance with such specification. IN THE ABSENCE OF ANY SUCH SPECIFICATION,
THE MANAGEMENT DESIGNEES, IF NAMED AS PROXY, WILL VOTE IN FAVOUR OF THE MATTERS
SET OUT THEREIN.
The enclosed Proxy confers discretionary authority upon the management
designees, or other persons named as proxy, with respect to amendments to or
variations of matters identified in the Notice of Meeting and any other matters
which may properly come before the Meeting. As of the date hereof, the
Corporation is not aware of any amendments to, variations of or other matters
which may come before the Meeting. In the event that other matters come before
the Meeting, then the management designees intend to vote in accordance with the
judgment of the management of the Corporation.
VOTING SHARES AND SECURITY OWNERSHIP OF CERTAIN
-----------------------------------------------
BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------
The Corporation has authorized capital consisting of an unlimited number of
Common Shares and an unlimited number of first preferred shares (the "First
Preferred Shares"). As of March 28, 2006, a total of 207,265,758 Common Shares
and no First Preferred Shares were issued and outstanding. The board of
directors of the Corporation (the "Board") has fixed March 28, 2006 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting and at any adjournment thereof. Each Common Share
outstanding on the record date carries the right to one vote. The Corporation
has caused to be prepared a list of the holders of its Common Shares on such
record date. Each shareholder named in the list will be entitled to one vote at
the Meeting for each Common Share shown opposite such shareholder's name except
to the extent that (a) such shareholder has transferred the ownership of such
Common Share after the date on which the list was prepared and (b) the
transferee of such Common Share produces a properly endorsed share certificate
or otherwise establishes that the transferee owns such Common Share and demands
not later than ten days before the Meeting that the transferee's name be
included in the list in which case the transferee will be entitled to vote such
Common Share at the Meeting. A complete list of the shareholders entitled to
vote at the Meeting will be open to examination by any shareholder for any
purpose germane to the Meeting, during ordinary business hours for a period of
ten days prior to the Meeting, at the office of CIBC Mellon Trust Company at 320
Bay Street, Toronto, Ontario, Canada M5H 4A6.
Under the Corporation's By-laws, the quorum for the transaction of business at
the Meeting consists of two persons present in person, each being a shareholder
entitled to vote thereat or a duly appointed proxyholder or representative for a
shareholder so entitled.
4
The following table shows the number of Common Shares beneficially owned, as of
March 28, 2006, by each person known to the Corporation or its directors or
executive officers to be the beneficial owner of more than 5% of its outstanding
Common Shares, by each director and the director nominees of the Corporation, by
each executive officer named in the table titled "Summary Compensation Table"
and by all directors, director nominees and executive officers of the
Corporation as a group. All information is taken from or based upon ownership
filings made by such persons with the U.S. Securities and Exchange Commission
("SEC") or upon information provided by such persons to the Corporation. Unless
otherwise noted, the Corporation believes that each person shown below has sole
investment and voting power over the Common Shares owned.
--------------------------------------------------------------------------------
Name and Address Number of Common Shares Percent of Common Shares
of Beneficial Owner** Beneficially Owned (1) Beneficially Owned
--------------------------------------------------------------------------------
Ian MacGregor 300,000(2) *
--------------------------------------------------------------------------------
James E. Askew 600,000(3) *
--------------------------------------------------------------------------------
David L. Bumstead 85,000(4) *
--------------------------------------------------------------------------------
David K. Fagin 976,805(5) *
--------------------------------------------------------------------------------
Michael P. Martineau 130,000(6) *
--------------------------------------------------------------------------------
Michael A. Terrell 2,344,972(7) 1.13%
--------------------------------------------------------------------------------
Peter J. Bradford 1,624,131(8) *
--------------------------------------------------------------------------------
Allan J. Marter 552,149(9) *
--------------------------------------------------------------------------------
Richard Q. Gray 505,480(10) *
--------------------------------------------------------------------------------
Bruce Higson-Smith 170,314(11) *
--------------------------------------------------------------------------------
Douglas A. Jones 259,864(12) *
--------------------------------------------------------------------------------
Directors and Executive
Officers as a group 7,548,715(13) 3.57%
(11 persons)
--------------------------------------------------------------------------------
Notes:
* Indicates less than one percent.
** The addresses of these persons, unless otherwise noted, is c/o Golden Star
Resources Ltd., 10901 West Toller Drive, Suite 300, Littleton, Colorado,
USA 80127.
(1) Amounts shown include Common Shares issuable pursuant to options or
warrants within the next 60 days.
(2) Includes 250,000 Common Shares subject to stock options.
(3) Includes 400,000 Common Shares subject to stock options.
(4) Includes 80,000 Common Shares subject to stock options.
(5) Includes 323,000 Common Shares subject to stock options.
(6) Includes 120,000 Common Shares subject to stock options.
(7) Includes 616,000 Commons Shares subject to stock options.
(8) Includes 1,175,000 Common Shares subject to stock options.
(9) Includes 467,500 Common Shares subject to stock options and 40,000 shares
subject to warrants.
(10) Includes 448,000 Common Shares subject to stock options.
(11) Includes 144,000 Common Shares subject to stock options.
(12) Includes 251,500 Common Shares subject to stock options.
(13) Includes an aggregate of 4,275,000 Common Shares subject to stock options
and 40,000 Common Shares subject to warrants.
5
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
------------------------------------------------
A. Compensation of Directors
1. Cash
During the year ended December 31, 2005, the Corporation paid a total of
$341,556 to its non-employee directors. This amount consisted of the following
annual fees:
o $90,000 to the Chairman;
o $20,000 to the non-employee directors (excluding the Chairman); plus
o $10,000 to the Chairman of the Audit Committee;
o $10,000 to the Chairman of the Nominating and Corporate Governance
Committee;
o $10,000 to the Chairman of the Sustainability Committee; and
o $5,000 to the Chairman of the Compensation Committee.
For 2005, the Corporation also paid the following fees to non-employee directors
for attending Board and Committee meetings as follows:
o $1,000 for attending a Board meeting; and
o $750 for attending a committee meeting.
In addition, for 2005 the Corporation paid to each non-employee director $12,000
for a total of 12 days spent in Ghana (being two six day visits) inspecting the
Corporation's facilities and attending various meetings.
Directors are also reimbursed for transportation and other out-of-pocket
expenses reasonably incurred for attendance at Board and committee meetings and
in connection with the performance of their duties as directors.
2. Stock Options
The Corporation's stock option plan (the "Stock Option Plan") provides for
discretionary grants of stock options to directors. Such grants may be made upon
a director's appointment or from time to time thereafter. See "Compensation of
Directors and Executive Officers - Executive Officers and Compensation of
Officers - Stock Option Plan" for a description of the Stock Option Plan.
During the financial year ended December 31, 2005, the Corporation granted to
its non-employee directors options to purchase a total of 200,000 Common Shares
at exercise prices of Cdn$4.58. The options vested immediately and have a
ten-year term. In addition, pursuant to the completion of the arrangement on
December 21, 2005 (the "Arrangement") whereby the Corporation acquired St. Jude
Resources Ltd. ("St. Jude"), an aggregate of 576,000 options to acquire Common
Shares with exercise prices ranging from Cdn$1.82 to Cdn$2.50 were issued to Mr.
Michael Terrell in exchange for his St. Jude options. These options were not
issued under the Stock Option Plan. A total of 130,000 options were exercised by
non-employee directors of the Corporation in 2005.
6
B. Executive Officers and Compensation of Officers
1. Executive Officers
As of March 28, 2006, the executive officers of the Corporation, their ages and
their business experience and principal occupation during the past five years
were as follows:
Name Age Office and Experience Officer Since
---- --- --------------------- -------------
PETER J. BRADFORD 47 Mr. Bradford has served as President and Chief Executive 1999
Officer of the Corporation since November 1999 and as a
member of the Board since August 2000. In addition, Mr.
Bradford serves as a director of Anvil Mining Limited, of
which he was the Managing Director from May 1998 to October
1999.
ALLAN J. MARTER 58 Mr. Marter has served as Senior Vice President since May 1999
2002 (prior to May 2002, Vice President), Chief
Financial Officer since November 1999, and Secretary of
the Corporation since June 2001.
RICHARD Q. GRAY 47 Mr. Gray has served the Corporation in several capacities 2000
including as Senior Vice President since May 2002 (prior to
May 2002, Vice President), Chief Operating Officer from
June 2001 to May 2005, Vice President, Ghana since January
2000, Managing Director of Wexford Goldfields Limited since
October 2002 and Managing Director of Bogoso Gold Limited
since November 1999 and General Manager of Wassa Gold Mine
since May 2005. Mr. Gray's additional experience includes
service as General Manager of Bogoso Gold Mine from March
1998 to October 1999.
BRUCE HIGSON-SMITH 45 Mr. Higson-Smith has served as Vice President, Corporate 2003
Development of the Corporation since September 2003. Prior
to his service with the Corporation, Mr. Higson-Smith was
an independent consultant from October 2002 to September
2003. In addition, Mr. Higson-Smith has served as Vice
President and Investment Manager with Resource Capital
Funds from September 1998 to October 2002.
DOUGLAS A. JONES 51 Dr. Jones has served as Vice President, Exploration of the 2003
Corporation since March 2003. Prior to his service with
the Corporation, Dr. Jones worked as a consultant from
December 2002 to February 2003. In addition, Dr. Jones
served as Chief Geologist of AurionGold Ltd. (formerly
Delta Gold Ltd.) from August 1998 through November 2002.
7
2. Summary Compensation
The following table sets forth the compensation received during each of the
Corporation's last three fiscal years by the Chief Executive Officer and Chief
Financial Officer of the Corporation and by the Corporation's three other most
highly compensated executive officers whose salaries and bonuses exceed
Cdn$150,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term
Compensation
Awards
Securities
Underlying
Name and Principal Corporation All Other
Position of Named Salary Bonus Options Compensation
Executive Officer Year ($) ($) (#) ($)
-----------------------------------------------------------------------------------------------------------
Peter J. Bradford 2005 315,000 75,000(1) 68,000(3) 790(5)
President and Chief 2004 315,000 91,000(2) 167,000(4) 2,809(5)
Executive Officer 2003 250,000 200,000 109,000 3,814(5)
-----------------------------------------------------------------------------------------------------------
Allan J. Marter 2005 200,000 45,000(6) 28,000(8) 8,885(9)
Senior Vice President, 2004 172,000 45,000(7) 74,000 7,828(9)
Chief Financial Officer 2003 162,000 82,000 49,000 6,237(9)
and Secretary
-----------------------------------------------------------------------------------------------------------
Richard Q. Gray 2005 188,000 30,000(10) 28,000(12) 7,500(5)
Senior Vice President and 2004 188,000 25,000(11) 48,000 2,568(5)
Chief Operating Officer 2003 180,000 60,000 38,000 2,512(5)
-----------------------------------------------------------------------------------------------------------
Bruce Higson-Smith(13) 2005 150,000 30,000(14) 28,000(16) 4,693(17)
Vice President, Corporate 2004 137,000 21,000(15) 19,000 3,806(17)
Development 2003 36,000 9,000 225,000 269(17)
-----------------------------------------------------------------------------------------------------------
Douglas A. Jones(18) 2005 150,000 30,000(19) 28,000(21) 7,500(5)
Vice President, 2004 130,000 21,000(20) 31,000 8,810
Exploration 2003 113,750 32,000 225,000 2,512
-----------------------------------------------------------------------------------------------------------
Notes:
(1) 2005 cash bonus.
(2) 2004 bonus includes 16,308 Common Shares valued at $60,667 which were
issued in January 2005; the value of the Common Shares was calculated
using the closing price on the American Stock Exchange of the Common
Shares ($3.72) on the date of the grant. The 2004 bonus also includes a
cash bonus of $30,333.
(3) Consists of 68,000 options granted in 2006 as part of the employee's 2005
compensation.
(4) Includes 65,000 options granted in 2005 as part of the employee's 2004
compensation.
(5) This amount represents premiums paid for life insurance for the benefit
of this executive.
(6) 2005 cash bonus.
(7) 2004 bonus includes 8,065 Common Shares valued at $30,000 which were
issued in January 2005; the value of the Common Shares was calculated
using the closing price on the American Stock Exchange of the Common
Shares ($3.72) on the date of the grant. The 2004 bonus also includes a
cash bonus of $15,000.
(8) Consists of 28,000 options granted in 2006 as part of the employee's 2005
compensation.
(9) This amount includes $5,252 in 2005, $4,988 in 2004, and $4,860 in 2003
for contribution to this executive's 401(k) Plan and $3,633.84 in 2005,
$2,840 in 2004, and $1,377 in 2003 for premiums paid for life insurance
for the benefit of this executive.
8
(10) 2005 cash bonus.
(11) 2004 bonus includes 4,480 Common Shares valued at $16,667 which were
issued in January 2005; the value of the Common Shares was calculated
using the closing price on the American Stock Exchange of the Common
Shares ($3.72) on the date of the grant. The 2004 bonus also includes a
cash bonus of $8,333.
(12) Consists of 28,000 options granted in 2006 as part of the employee's 2005
compensation.
(13) Bruce Higson-Smith was appointed Vice-President, Corporate Development at
the end of September 2003. Thus, his compensation in 2003 is only for
that portion of the year beginning in September.
(14) 2005 bonus includes 4,000 Common Shares valued at $15,326 which were
issued in February 2006; the value of the Common Shares was calculated
using the closing price on the American Stock Exchange of the Common
Shares ($3.84) on the date of the grant. The 2005 bonus also includes a
cash bonus of $14,674.
(15) 2004 bonus includes 3,764 Common Shares valued at $14,000 which were
issued in January 2005; the value of the Common Shares was calculated
using the closing price on the American Stock Exchange of the Common
Shares ($3.72) on the date of the grant. The 2004 bonus also includes a
cash bonus of $7,000.
(16) Consists of 28,000 options granted in 2006 as part of the employee's 2005
compensation.
(17) This amount includes $3,973 in 2005 and $3,265 in 2004 for contribution
to this executive's 401K Plan and $720 in 2005, $542 in 2004 and $269 in
2003 for premiums paid for life insurance for the benefit of this
executive.
(18) Dr. Jones was appointed Vice President, Exploration in March 2003. Thus,
his compensation in 2003 is only for that portion of the year beginning
in March.
(19) 2005 cash bonus.
(20) 2004 bonus includes 3,764 Common Shares valued at $14,000 which were
issued in January 2005; the value of the Common Shares was calculated
using the closing price on the American Stock Exchange of the Common
Shares ($3.72) on the date of the grant. The 2004 bonus also includes a
cash bonus of $7,000.
(21) Consists of 28,000 options granted in 2006 as part of the employee's 2005
compensation.
3. Stock Option Plan
The Stock Option Plan provides to certain key employees, consultants and
directors (including non-employee directors) of the Corporation and its
subsidiaries an incentive to maintain and to enhance the long-term performance
of the Corporation through the acquisition of Common Shares pursuant to the
exercise of stock options. The Stock Option Plan provides for discretionary
option grants to employees, consultants and directors. Currently, there are
approximately sixty key employees (including executive officers) and five
non-employee directors of the Corporation and its subsidiaries who are eligible
to receive options under the Stock Option Plan.
Subject to certain other limitations, the maximum number of Common Shares
authorized for issuance under the Stock Option Plan is 15,000,000 Common Shares
(or approximately 7.28% of the issued and outstanding Common Shares). As at
March 28, 2006, 6,047,902 Common Shares (or approximately 2.92% of the issued
and outstanding Common Shares) remain available for grant, and an aggregate of
5,408,451 Common Shares (or approximately 2.61% of the issued and outstanding
Common Shares) are issuable under options that have been granted under the Stock
Option Plan. The maximum number of Common Shares that may be issued to insiders
under the Stock Option Plan is limited to that number which is equal to the
difference between (i) 10% of the outstanding number of Common Shares from time
to time, and (ii) the number of Common Shares that are reserved for issuance to
insiders pursuant to stock options granted under other stock option plans or
arrangements of the Corporation. The total number of Common Shares that may be
issued to any one optionee pursuant to options granted under the Stock Option
Plan or other stock option plans or arrangements of the Corporation can not
exceed 5% of the outstanding number of Common Shares from time to time. The
maximum number of shares that may be issued to any optionee in any one calendar
year is 400,000 Common Shares (or approximately 0.19% of the issued and
outstanding Common Shares).
9
The Compensation Committee makes recommendations to the Board regarding all
option grants. The Board has the authority, subject to the terms of the Stock
Option Plan, to determine when and to whom to make grants under the Stock Option
Plan, the number of Common Shares to be covered by the grants, the terms of
options granted and the exercise price of options, and to prescribe, amend and
rescind rules and regulations relating to the Stock Option Plan. Options granted
under the Stock Option Plan are exercisable over a period determined by the
Board, but not to exceed ten years from the date of grant, and the exercise
price of an option may not be less than the closing price of the Common Shares
on the stock exchange on which the Common Shares principally trade on the day
immediately preceding the date of grant. In addition, the grant of an option may
be subject to vesting conditions established by the Board as provided in the
option agreement evidencing the grant of such option. All options granted to
non-employee directors vest immediately and options granted to executive
officers and other employees are subject to vesting as determined at the date of
grant, which vesting is either as to one-third on grant, and one-third on each
of the second and third anniversary dates, or as to one-fourth on grant and an
additional one-fourth on each of the second, third and fourth anniversary dates.
In the event of an optionee's termination of employment or service prior to the
time all or any portion of an option vests, such option, to the extent not
vested, shall terminate. Except as otherwise provided by the Committee or the
Board, as the case may be, if an optionee ceases to be employed by, or provide
services to, the Corporation for any reason (other than by reason of death), the
optionee's options generally will expire 30 days following such termination in
the case of a non-director optionee and within 12 months in the case of a
director optionee. If the optionee dies while employed (or within the 30-day
period referred to in the preceding sentence), all outstanding options, to the
extent then vested, may be exercised within one year after the optionee's date
of death by the person or persons to whom the optionee's rights pass. In no case
may options be exercised later than the expiration date specified in the grant.
Options may be transferred by an optionee only by will or by the laws of descent
and distribution, and during his or her lifetime may be exercised only by an
optionee during his or her lifetime.
Although the Stock Option Plan provides for interest free loans (subject to the
terms of the Stock Option Plan) to be made available to optionees who are
employees of the Corporation or its subsidiaries for the purpose of exercising
options under the Stock Option Plan, such loans and there are no such loans
outstanding.
The exercise price and the number of Common Shares to be purchased by an
optionee upon the exercise of an option will be adjusted by the Board in
accordance with the terms of the Stock Option Plan on the occurrence of certain
corporate events or changes to the Common Shares.
The Stock Option Plan provides that it will terminate, unless earlier terminated
in accordance with its terms, on the tenth anniversary of its approval. The
Stock Option Plan provides that it generally may be amended or terminated at any
time by the Board. However, any such amendment or termination shall be subject
to any necessary stock exchange, regulatory or shareholder approval. In
addition, no amendment to an option may adversely affect the rights under such
option without the consent of the optionee.
10
i) Stock Option Grants
The following table sets forth the options granted to the Named Executive
Officers during the last fiscal year.
OPTION GRANTS DURING MOST RECENTLY
COMPLETED FISCAL YEAR
(all $ amounts in Canadian dollars)
Potential Realizable
Value
at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term(1)
-------------------------------------------------------------------------------------------------------------------
Market
Value of
Securities
Underlying
Number of % of Total Option on
Securities Options Exercise or the Date
Underlying Granted to Base Price of Grant
Name of Named Options Employees in (Cdn$/ (Cdn$/ Expiration 5% 10%
Executive Officer Granted (#) Fiscal Year Share)(2) Share)(3) Date (Cdn$) (Cdn$)
-------------------------------------------------------------------------------------------------------------------
Peter J. Bradford 65,000 12.6 $4.58 $4.58 1/27/15 187,222 474,457
-------------------------------------------------------------------------------------------------------------------
Allan J. Marter 32,000 6.2 $4.58 $4.58 1/27/15 92,171 233,579
-------------------------------------------------------------------------------------------------------------------
Richard Q. Gray 18,000 3.5 $4.58 $4.58 1/27/15 51,846 131,388
-------------------------------------------------------------------------------------------------------------------
Bruce Higson-Smith 15,000 2.9 $4.58 $4.58 1/27/15 43,205 109,490
-------------------------------------------------------------------------------------------------------------------
Douglas A. Jones 15,000 2.9 $4.58 $4.58 1/27/15 43,205 109,490
-------------------------------------------------------------------------------------------------------------------
Notes:
(1) In accordance with the rules of the SEC, these amounts are the hypothetical
gains or "option spreads" that would exist for the respective options based
on assumed rates of annual compound stock price appreciation of 5% and 10%
from the date the options were granted over the full option term.
(2) All options are granted at an exercise price equal to the closing market
price of the Common Shares on the date immediately prior to the date of the
grant. All options vest as to one-fourth on date of grant and as to an
additional one-fourth on each of the second, third and fourth anniversary
dates of the date of grant.
(3) On January 26, 2005, being the last trading day prior to the date of grant,
the closing price of the Common Shares on the TSX was Cdn$4.58. On March
28, 2006, the closing price of the Common Shares on the TSX was Cdn$3.85.
ii) Stock Option Exercises and Year-End Option Values
The following table sets forth information concerning the fiscal year-end value
of unexercised options of the Corporation and of options to purchase common
shares of the Corporation's 53% owned subsidiary traded on the Nouveau Marche
and the Toronto Stock Exchange (the "TSX"), EURO Ressources S.A. ("EURO"), held
by the Named Executive Officers. There were no exercises of stock options to
purchase common shares of EURO during the fiscal year ended December 31, 2005 by
the Named Executive Officers.
11
AGGREGATED OPTION EXERCISES
DURING THE MOST RECENTLY COMPLETED FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
(all $ amounts in Canadian dollars)
---------------------------------------------------------------------------------------------------------
Value of Unexercised In-the-
Shares Money Options at Fiscal
Name of Acquired Aggregate Number of Unexercised Year End
Named Underlying on Value Options at Fiscal Year End (Cdn$) (1)
Executive Securities Exercise Realized ---------------------------------------------------------
Officer Of (#) (Cdn$) Exercisable Unexercisable Exercisable Unexercisable
---------------------------------------------------------------------------------------------------------
Peter J. Corporation 0 N/A 1,116,250 99,750 1,741,200 0
Bradford ---------------------------------------------------------------------------------------------
EURO(2) 0 N/A 75,000 0 18,750 0
---------------------------------------------------------------------------------------------------------
Allan J. Corporation 0 N/A 421,000 45,000 607,250 0
Marter ---------------------------------------------------------------------------------------------
EURO(2) 0 N/A 50,000 0 12,500 0
---------------------------------------------------------------------------------------------------------
Richard Q. Corporation
Gray 0 N/A 436,500 28,500 715,970 0
---------------------------------------------------------------------------------------------------------
Bruce Corporation
Higson-
Smith 0 N/A 132,250 69,500 0 0
---------------------------------------------------------------------------------------------------------
Douglas A. Corporation
Jones 0 N/A 236,750 19,250 157,500 0
---------------------------------------------------------------------------------------------------------
Notes:
(1) For all unexercised options held as of December 31, 2005, the aggregate
dollar value provided is the excess of the market value of the shares
underlying those options over the exercise price of those options. On
December 31, 2005, the closing price of the Common Shares was Cdn$3.09 on
the TSX and the closing price of the common shares of EURO was Cdn$0.50 on
the TSX. On March 28, 2006, the closing price of the Common Shares was
Cdn$3.85 on the TSX and the closing sale price of the common shares of EURO
was Cdn$1.10 on the TSX.
(2) The Corporation has occasionally granted, as additional compensation,
options to purchase common shares of EURO. The term of each such option is
10 years and each such option vested immediately. The Corporation did not
grant any such options to directors and Named Executive Officers during the
fiscal years ended December 31, 2005 and 2004.
4. Bonus Plans
The Corporation has an Employees' Stock Bonus Plan (the "Stock Bonus Plan") for
any full-time or part-time employee (whether or not a director) of the
Corporation or any of its subsidiaries who has rendered meritorious services
that contributed to the success of the Corporation or any of its subsidiaries.
Up to 900,000 Common Shares (or approximately 0.4% of the issued and outstanding
Common Shares) are authorized for issuance under the Stock Bonus Plan. The Stock
Bonus Plan is currently administered by the Compensation Committee and provides
for grants of bonus Common Shares on terms that the Compensation Committee
recommends to the Board, within the limitations of the Stock Bonus Plan and
subject to the rules of applicable regulatory authorities. The maximum number of
Common Shares that may be issued under the Stock Bonus Plan in any calendar year
will not exceed in the aggregate 2% of the total number of outstanding Common
12
Shares at the end of the immediately preceding calendar year, provided that (i)
no more than 1% of the total number of outstanding Common Shares at the end of
the immediately preceding calendar year can be issued to any one insider, (ii)
the total number of Common Shares issuable within any one-year period to all
insiders of the Corporation pursuant to the Stock Bonus Plan and pursuant to the
exercise of vested options granted under other share compensation arrangements
can not exceed 10% of the then outstanding Common Shares, and (iii) the total
number of Common Shares issuable within any one-year period to an employee under
the Stock Bonus Plan and such employee's associates pursuant to the Stock Bonus
Plan and pursuant to the exercise of vested options granted under other share
compensation arrangements can not exceed 5% of the then outstanding Common
Shares.
A total of 536,920 Common Shares (or approximately 0.3% of the issued and
outstanding Common Shares) have been issued under the Stock Bonus Plan to March
28, 2006. In 2005, no Common Shares were issued under the Stock Bonus Plan;
however the Named Executive Officers received as part of their bonus for 2005
certain Common Shares which were issued in 2006 pursuant to the Stock Bonus Plan
(see the "Summary Compensation Table" and the notes thereto). As of March 28,
2006, 363,080 Common Shares (or approximately 0.2% of the issued and outstanding
Common Shares) remain available for grant under the Stock Bonus Plan.
The Board has the right to amend or terminate the Stock Bonus Plan at any time
in its discretion. In addition, certain amendments to the Stock Bonus Plan
require shareholder and regulatory approval.
The Corporation also maintains an Executive Management Performance Bonus Plan
(the "Executive Bonus Plan") under which the Corporation's executive officers
and certain other management personnel are eligible for bonuses, including
bonuses under the Stock Bonus Plan and cash bonus awards. Bonuses are awarded
under the Executive Bonus Plan at the discretion of the Board, based on the
Board's evaluation of the performance of both the Corporation and the
participant measured against performance objectives established each year.
In addition, pursuant to the Arrangement, the Corporation issued an aggregate of
2,533,176 options to acquire Common Shares (representing 1.2% of the
Corporation's outstanding Common Shares) to directors, officers and employees of
St. Jude in exchange for the St. Jude options held by such persons. The exercise
prices of such Corporation options range from Cdn$0.29 to Cdn$2.58 and have
expiry dates ranging from February 12, 2007 to September 21, 2009, subject to
earlier expiration in certain prescribed circumstances. These options are not
transferable or assignable by the holders other than by a legal will or pursuant
to the laws of succession and no such option may be exercised by anyone other
than the holder or the holder's legal representative.
13
EQUITY COMPENSATION PLAN INFORMATION
As of December 31, 2005
---------------------------------------------------------------------------------------------------
(b) (c)
(a) Weighted Average Number of Securities
Number of Securities Exercise Price of Remaining Available for
to be Issued upon Outstanding Future Issuance Under
Exercise of Options, Warrants Equity Compensation Plans
Outstanding Options, and Rights (Excluding Securities
Plan Category Warrants and Rights (Cdn$) reflected in Column (a)
---------------------------------------------------------------------------------------------------
Equity Compensation Plans
Approved by
Securityholders 4,856,451 $3.08 7,150,738(1)
---------------------------------------------------------------------------------------------------
Equity Compensation Plans
Not Approved by
Securityholders 2,533,176(2) $2.09 0
---------------------------------------------------------------------------------------------------
Total 7,389,627 $2.58 7,150,738
---------------------------------------------------------------------------------------------------
Notes:
(1) Represents Common Shares issuable under the Stock Option Plan and the Stock
Bonus Plan.
(2) Represents options of the Corporation issued pursuant to the Arrangement in
exchange for St. Jude options.
See Note 18 to the Corporation's financial statements as contained in the
December 31, 2005 Form 10-K for a further description of the Stock Option Plan
and the Stock Bonus Plan.
5. Employment, Change of Control Agreements and Other Agreements
All Named Executive Officers currently employed by the Corporation have
agreements with the Corporation or a subsidiary in respect of their employment
with the Corporation. The base salary amounts payable under these employment
agreements are reviewed annually by the Compensation Committee.
The Corporation amended certain terms of Peter J. Bradford's employment
agreement with effect from December 17, 2004, whereby the employment agreement
was assigned to Caystar Management Holdings.
The Corporation or a subsidiary has entered into amended and restated employment
agreements with Peter J. Bradford, Allan J. Marter, Richard Q. Gray, Bruce
Higson-Smith and Dr. Douglas A. Jones. The material terms of the agreements
include: (a) employment for terms of one year from May 1, 2004 with automatic
renewal for successive one-year periods; (b) a base salary (see the 2004 salary
of the Named Executive Officers as set forth under the "Summary Compensation
Table" above); (c) severance payments upon a termination of employment without
cause in an amount equal to the sum of the employee's base salary (two times
such amount for Mr. Bradford), the average of the target bonus for the employee
for the current calendar year and the bonus paid to the employee for the
previous year, plus amounts based on previous year benefits; (d) a lump sum
payment in the event of a "termination upon a change in control" (as described
below) in an amount equal to two times the sum of the employee's base salary
(three times such amount for Mr. Bradford), the average of the target bonus for
the employee for the current calendar year and the bonus paid to the employee
for the previous year, plus amounts based on previous year benefits; and (e)
participation in the Stock Option Plan, the Executive Bonus Plan, and in such of
the Corporation's benefit and deferred compensation plans as are from time to
time available to executive officers of the Corporation.
14
A "termination upon a change in control" will occur when a Named Executive
Officer is terminated within 24 months following a "change in control" (as
described below) or if the Named Executive Officer terminates his employment
contract within 24 months of a "change in control" for reasons which may include
a substantial alteration in the nature or status of employment responsibilities,
a reduction in compensation or benefits, a relocation of the Corporation's
principal offices or a relocation of the Named Executive Officer outside of
Denver, Colorado, certain material breaches of the employment contract, or a
failure by the successor company to assume the obligations under the employment
contract. A "change in control" is deemed to have occurred if: (i) certain
prescribed persons become the beneficial owner, directly or indirectly, of more
than 30% of the then outstanding voting stock of the Corporation; (ii) persons
who are incumbent directors cease to constitute a majority of the Board; (iii)
the shareholders of the Corporation approve a merger, consolidation or
amalgamation of the Corporation with any other corporation (other than one where
the voting securities of the Corporation outstanding immediately prior thereto
continue to represent at least 50% of the combined voting power of the voting
securities of the Corporation or the surviving entity outstanding immediately
after such transaction); or (iv) the shareholders approve a plan of complete
liquidation of the Corporation or the sale or disposition by the Corporation of
all or substantially all of the Corporation's assets.
St. Jude is a party to an executive employment agreement (the "Executive
Employment Agreement") with Bluestar Management Inc. ("Bluestar"), of which
Michael A. Terrell is principal. Pursuant to the Executive Employment Agreement
Michael A. Terrell will be paid $20,833.00 per month until July 2007, for
management services provided to St. Jude. If the Executive Employment Agreement
is terminated within 24 months of a change in control of the Corporation,
Bluestar will be entitled to a termination payment equal to 12 times $20,833.00
multiplied by a fraction, the numerator of which will be six plus one for each
year since 1987 (being the year in which Michael A. Terrell was first employed
by St. Jude) and the denominator of which will be 12.
C. Compensation Committee Report on Executive Compensation
Composition of the Compensation Committee
The members of the Compensation Committee are Messrs. James E. Askew (Chairman),
David L. Bumstead and Ian MacGregor. Mr. Askew was president of the Corporation
from March 1999 through October 1999. Members of the Compensation Committee are
appointed on an annual basis after the election of directors. See "Certain
Relationships and Related Transactions"
15
Mandate of the Compensation Committee
The mandate of the Compensation Committee includes recommending for the approval
of the Board of Directors compensation arrangements for all executive officers
of the Corporation and its controlled subsidiaries (subject to the approval of
the board of directors of the subsidiaries, if required). Cash and benefits
compensation is provided for in agreements that have been negotiated and entered
into with the Chief Executive Officer and the Named Executive Officers of the
Corporation as described above. At the time such agreements were entered into,
the Compensation Committee considered the compensation levels for such positions
to be comparable to those of other public junior to mid-size gold producing
companies. Subsequent adjustments have reflected, among other things, merit,
cost of living, industry trends and special living conditions. Executive
salaries are reviewed on a yearly basis and are set for individual executive
officers based on the level of responsibility, scope and complexity of the
executive's position and an evaluation of each individual's role and performance
in advancing the successful development of the Corporation, the officer's
performance in general, the Corporation's performance and a comparison of salary
ranges for executives of other companies in similar businesses. In February
2000, the Board, upon recommendation of the Compensation Committee, adopted a
remuneration matrix based essentially on these criteria, which remained
substantially unchanged in 2005.
Mr. Bradford's salary for 2005 was $315,000. When establishing Mr. Bradford's
salary the Compensation Committee considered the factors listed above, as well
as the Corporation's performance over the last five years.
The Compensation Committee determines any annual bonus to be awarded to the
Chief Executive Officer and the other Named Executive Officers based on a
combination of the Corporation's performance for the year and the achievement by
each person of both corporate and individual key performance indicators
established by the Compensation Committee as of the commencement of the
applicable fiscal year.
The Board considers options to purchase Common Shares and the granting of stock
bonuses to be an essential element of the compensation arrangements for
executive officers. In determining the amount of stock options and stock bonuses
to be granted, the Compensation Committee considers, among other things, the
officer's position, salary, and performance both overall and against specific
objectives, which relates to the officer's accomplishments and the Corporation's
performance. The Compensation Committee adopted a guide in February 2000 for
determining option awards based on multiples that are a function of the
Corporation's and the executive's performance. The Corporation granted stock
options to the Named Executive Officers in 2005 based on this guide.
THE COMPENSATION COMMITTEE
James E. Askew, Chairman
David L. Bumstead
Ian MacGregor
16
D. Performance Graph and Table
The following graph and table illustrates the cumulative total shareholder
return on the Common Shares for the fiscal years ended December 31, 2000 through
2005, together with the total shareholder return of the S&P/TSX Composite Index
and the Canadian Gold Index for the same period. The graph and table assumes an
initial investment of Cdn$100 at December 31, 2000 and is based on the trading
prices of the Common Shares on the TSX during the periods indicated. Because the
Corporation did not pay dividends on its Common Shares during the measurement
period, the calculation of the cumulative total shareholder return on the Common
Shares does not include dividends.
[GRAPHIC OMITTED]/[PLEASE SEE SUPPLEMENTAL PDF]
All dollar figures in foregoing graph are Canadian dollars.
---------------------------------------------------------------------------------------------------------------------
12/31/00 12/29/01 12/31/02 12/31/03 12/31/04 12/31/05
---------------------------------------------------------------------------------------------------------------------
Golden Star Resources Ltd.
Dollar Value $100.00 $136.38 $439.41 $1372.76 $730.34 $468.21
Annualized Return since base year 36.38% 17.00% 139.44% 64.39% 36.17%
Return over previous year 36.40% 109.62% 212.40% -46.80% -35.89%
---------------------------------------------------------------------------------------------------------------------
S&P/TSX Composite Index(1)
Dollar Value $100.00 $86.10 $74.05 $92.04 $106.12 $126.75
Annualized Return since base year -13.90% -13.95% -2.73% 1.50% 4.86%
Return over previous year -13.90% -14.00% 24.30% 15.30% 19.44%
---------------------------------------------------------------------------------------------------------------------
Canadian Gold Index(2)
Dollar Value $100.00 $116.90 $152.38 $171.50 $155.62 $184.07
Annualized Return since base year 16.90% 23.44% 19.70% 11.69% 12.98%
Return over previous year 16.90% 30.35% 12.55% -9.26% 18.28%
---------------------------------------------------------------------------------------------------------------------
* All dollar figures in foregoing table are Canadian dollars.
17
Notes:
(1) Formerly the TSX 300 Composite Index.
(2) Formerly the Toronto Gold and Silver Index. The Index for December 31, 2002
and 2003 was estimated by adjusting the December 31, 2001 return on the
Toronto Gold and Silver Index for the return indicated by the Canadian Gold
Index during 2002 and 2003.
AUDIT COMMITTEE REPORT
----------------------
The Audit Committee has reviewed and discussed with management of the
Corporation the audited financial statements of the Corporation for the fiscal
year ended December 31, 2005 (the "Audited Financial Statements").
The Audit Committee has discussed with PricewaterhouseCoopers LLP, independent
accountants for the Corporation since 1994, the matters required to be discussed
by Statement on Auditing Standards No. 61.
The Audit Committee has received the written disclosures and the letter from
PricewaterhouseCoopers LLP required by the Independence Standards Board Standard
No. 1, and has discussed with PricewaterhouseCoopers LLP its independence and
has considered the compatibility of the non-audit services which it provides
with maintenance of that independence.
Based on the reviews and discussions described above, the Audit Committee
recommended to the Board that the Audited Financial Statements be included in
the Corporation's Annual Report on Form 10-K for the fiscal year ended December
31, 2005 for filing with the SEC.
THE AUDIT COMMITTEE
David K. Fagin, Chairman
David L. Bumstead
Ian MacGregor
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
-------------------------------------------
The following information is provided in response to National Instrument 58-101
and its companion Form 58-101F1:
Board of Directors
The current Board, all of whose members (except Mr. David Bumstead) are being
nominated in this Circular for re-election at the meeting, comprises five
directors who are independent by virtue of their not having a direct or indirect
material relationship (as defined under applicable law and regulations) with the
Corporation. The directors who are not independent are Mr. Peter Bradford, the
Corporation's President and Chief Executive Officer and Mr. Michael Terrell. Mr.
Terrell is the principal of Bluestar, which has an executive employment
agreement with St. Jude.
18
Of the current Board members, Mr. James Askew is a director of Asian Mineral
Resources Ltd., Climax Mining Ltd., Sino Gold Ltd. and Yamana Gold Inc.; Mr.
Bradford is a director of Anvil Mining Limited; Mr. Fagin is a director of
Canyon Resources Corporation, Pacific Rim Mining Company and T. Rowe Price
Mutual Funds; Mr. MacGregor is a director of Asian Mineral Resources Ltd.;
Michael Martineau is a director of Axmin Inc. Each of these companies is a
reporting issuer or equivalent in Canada or another jurisdiction.
The Board follows the practice of including in each regularly scheduled Board
meeting a discussion involving the independent directors in the absence of
management at which the independent directors have the opportunity to raise any
matter they believe merits or requires discussion. Accordingly, for corporate
governance disclosure purposes, the independent directors held 12 meetings in
2005 at which non-independent directors and members of management were not
present.
Mr. Ian MacGregor serves as Chairman of the Board. As disclosed above, he is an
independent director. The Chairman's duties are described below in "Position
Descriptions".
Except for Mr. Askew, Mr. Martineau and Mr. MacGregor, who did not attend one
board meeting each, each director attended all Board meetings held in 2005. Mr.
Bumstead was unable to attend one meeting of the Audit Committee.
Board Mandate
While the Board has no written mandate as such, its duties and activities are
performed in a manner that is considered responsive to statutory and other legal
requirements and in accordance with best corporate governance practices.
The Board establishes overall policies and standards for the Corporation. The
Board expects management to conduct the business of the Corporation in
accordance with the Corporation's ongoing strategic plan as adopted by the
Board. The Board regularly reviews management's progress in meeting these
expectations. The directors are kept informed of the Corporation's operations at
meetings of the Board and its committees and through reports and analyses and
discussions with management. The Board normally meets seven times a year in
person, with additional meetings being held as needed. In 2005, there were a
total of 12 meetings of the Board.
The following is a summary of how the Board deals with matters pertaining to
strategic planning, risk management, communication and internal control systems,
and management and succession:
o Each year the Board reviews and approves planning assumptions and
detailed monthly budgets for the following year and annual projections
for the following five years. The Board monitors performance against
budget through reporting by management in the form of monthly reports
and Board papers.
o The Board seeks to identify the principal risks of the Corporation's
business which are wide-ranging because of the nature of the
Corporation's business, including risks associated with operating in
developing countries, maintaining control of the Corporation's assets
and funds, political risks, exchange controls, environmental and
safety risks, government regulation problems, title matters, civil
unrest, the availability of skilled management and labour.
19
o The Board annually considers the overall performance of management to
identify areas where additional skills may be required and to consider
the measures required to ensure sufficient management depth for the
management of the Corporation in the event of the loss of any of the
Corporation's executive management team.
o The Chief Executive Officer and the Chief Financial Officer provide
shareholder communications on behalf of the Corporation.
o The Board has the responsibility to periodically review the
environmental and safety policies adopted by the Corporation and its
affiliates and has established policies on Safety, Community Relations
and Environment.
o The Board has the responsibility to periodically review the integrity
of the Corporation's internal control and management information
systems.
The Board has adopted Policies on Corporate Control with respect to annual
budgets, financial and budget reporting, activities reporting, acquisitions and
dispositions of assets, joint ventures, spending authorities, contracts and
investment banking services. Therefore, in addition to those matters that must
by law be approved by the Board, the Board approves, among other things, the
terms of acquisitions and dispositions of the mineral properties of the
Corporation and its subsidiaries as well as joint venture agreements on such
properties. Operating and capital budgets also require the Board's approval. The
Board receives monthly reports on operational, financial and business
development matters. Finally, because of its relatively small size, the Board is
very flexible and management is able to liaise regularly with the Board to
discuss and seek approval for various activities.
Position Descriptions
The Board has adopted a position description for the Chairman of the Board
whereby the Chairman presides over meetings of the Board, interfaces between the
Board and senior management, including regular consultations with the President
and CEO on a variety of matters of importance to the Corporation's business, its
relationships with shareholders and other stakeholders and the relationship
between the Board and management, including all matters which properly come
within the scope of the duties and responsibilities of a non-executive chairman
to ensure that the Corporation fulfils its commitment of adherence to corporate
governance best practices.
20
While no specific position description has been adopted for the chairs of each
of the Corporation's four standing committees -namely the Audit, Compensation,
Nominating and Corporate Governance and Sustainability committees, each chair is
responsible for ensuring that the committee over which he presides properly
discharges the obligations imposed by its charter (available for inspection on
the Corporation's website at www.gsr.com), interfacing with management and
making required recommendations to the Board. In particular, the Chair of the
Audit Committee is responsible for a number of matters, such as communication
with the Corporation's auditors in accordance with the SEC and the United States
Sarbanes-Oxley Act of 2002 ("SOX") requirements to which the Corporation is
subject.
The Board has adopted a position description for the Corporation's President and
CEO which, among other things, is compliant with SOX requirements.
Orientation and Continuing Education
New directors are provided with the Corporation's committee charters and Board
and Corporation policies and with non-public information on the Corporation's
business and assets. They have access to Board members and senior management
personnel before accepting a position as director to enable them to perform due
diligence and to acquire the information required to begin performing their
duties at an acceptable level. In the course of these due diligence activities,
new directors are made aware of the role of the Board and its committees and the
nature and operation of the Corporation's assets and business.
Management believes that each member of the current Board has the basic skills
and knowledge required to function effectively as a director of the Corporation
and that the individual skills and experience possessed by individual Board
members are complementary to achieving a Board that can supervise the
Corporation's business in a manner responsive to the interests of all
stakeholders and in a responsible and ethical manner. Board candidates are
selected based on the possession of such basic and complementary skills.
The chair of the Nominating and Corporate Governance Committee has a specific
responsibility to ensure that Board members are kept up to date on corporate
governance matters, and the directors' other business interests are such as to
keep them abreast of corporate developments generally and those in the gold
mining industry in particular. For the past few years, the Board has made annual
(in 2005, two) visits to the Corporation's production facilities in Ghana in the
course of which Board members have had full opportunity to inspect the
Corporation's assets and to interface with all levels of management and with
local stakeholders.
21
Ethical Business Conduct
The relevant policies and codes, all of which are available on the Corporation's
website, consist of:
o a recently updated Business Conduct and Ethics Policy which applies to
the Corporation, its subsidiaries, divisions and affiliates and which
reaffirms that the observance of applicable law and ethical business
conduct wherever the Corporation does business must be the guiding
principle. The Corporation's Senior Vice President and Chief Financial
Officer has been designated as compliance officer to ensure proper
implementation of the Policy;
o a recently updated Code of Ethics for Directors, Senior Executive and
Financial Officers and Other Executive Officers adopted pursuant to
Section 406 of SOX and the rules of AMEX to provide written standards
of guidance to the affected individuals for honest and ethical conduct
and compliance with applicable law. This Code requires that
individuals covered by its provisions report suspected violations to
either of the Chairman of the Board or the Senior Vice President and
Chief Financial Officer, in his capacity as compliance officer, and
that the Board take appropriate action on any such reports;
o a recently updated Policy on Insider Trading and Reporting which
mandates the trading restrictions on the Corporation's shares to which
directors, officers, employees and others are subject under applicable
law and as a matter of corporate policy;
o a recently updated Whistleblower Policy whereby employees are required
to report concerns regarding possible violations by employees or other
persons of legal or regulatory requirements or internal policies
relating to accounting standards and disclosures, internal accounting
controls or matters related to the internal or external audit of the
Corporation's financial statements either to the Corporation's
Compliance Officer, any other member of management or the Audit
Committee, anonymously if the individual so chooses. The Audit
Committee is responsible for dealing appropriately with all such
reports.
In 2005, no alleged or suspected violations had been reported under any of the
foregoing.
As a matter of policy, the Board is required to approve the holding by any
director or officer of a Board or executive position creating a potential
business or legal conflict affecting that individual's ability to properly carry
out his duties and serve the Corporation's best interests. As a matter of law,
Board members are required to disclose material interests in proposed
transactions, after which the Board determines the propriety of the affected
individual participating in either or both of discussion and voting, whether or
not otherwise entitled to do either or both.
22
Nomination of Directors
As disclosed above, the Corporation's objective is to have a Board of Directors,
each of whose members has the required experience, skills, judgment and
character to perform effectively and ethically as a Board member and which, as a
group, have skills complementary to the nature of the Corporation's business and
the environment in which the Board operates. Potential Board candidates are
identified and selected with reference to these criteria. The process is
supervised by the Nominating and Corporate Governance Committee which is
responsible for recommending candidates for nomination or re-election, as the
case may be, as set out in its charter.
Compensation
The Compensation Committee, a majority of whose members are independent
directors, is responsible for making recommendations to the Board regarding the
compensation to be paid to directors and officers. In fulfilling its mandate,
the Corporation has regard to executive performance based on achievement of
corporate and individual goals, published information in industry surveys, the
need to attract and retain qualified management personnel and board members and
other considerations.
Board Committees
As disclosed above, there are four standing committees of the Board, namely the
Audit, Compensation, Nominating and Corporate Governance and Sustainability
committees.
i) Audit Committee
The Audit Committee is currently comprised of Messrs. David K. Fagin (Chairman),
David L. Bumstead and Ian MacGregor each of whom has been determined by the
Board to be unrelated, an outside member with no other affiliation with the
Corporation and independent as defined by the American Stock Exchange. The Board
has determined that each of the members of the Audit Committee is financially
literate, unrelated, an outside member with no other affiliation with the
Corporation and is independent as defined by the American Stock Exchange. The
Board has determined that Mr. Fagin is an "audit committee financial expert" as
defined by the SEC. The primary duties and responsibilities of the Audit
Committee, as set out in its charter, are to review the financial reporting
process, the system of internal control, the audit process, related party
transactions, compliance with the Corporation's codes of ethics or conduct and
the Corporation's process for monitoring compliance with laws and regulations.
The Audit Committee is responsible for the appointment, compensation, retention,
termination and oversight, subject to the requirements of Canadian law, of the
work of the independent auditor. In performing its duties, the Audit Committee
maintains effective working relationships with the Board, management and the
external auditors. To effectively perform his role, each committee member must
obtain and maintain an understanding of the detailed responsibilities of
committee membership as well as the Corporation's business, operations and
risks. In addition, the Audit Committee recommends to the Board for approval the
annual and quarterly financial statements, the annual and quarterly reports and
certain other documents required by regulatory authorities. In connection with
risk assessment, the Audit Committee reviews, among other things, the nature and
adequacy of insurance coverage. The Audit Committee met five times during 2005.
23
ii) Compensation Committee
The Compensation Committee is composed of Messrs. James E. Askew (Chairman),
David L. Bumstead and Ian MacGregor, each of whom has been determined by the
Board to be unrelated, an outside member with no other affiliation with the
Corporation and independent as defined by the American Stock Exchange. The
Compensation Committee, subject to Board approval, supervises the selection,
evaluation and determination of compensation of executive officers, sets
corporate-wide policy with respect to compensation and benefits, and administers
the Plan (except with respect to grants to non-employee directors) and the Stock
Bonus Plan. The Compensation Committee also recommends to the Board the
descriptions, definitions and limits to management's authorities and approval of
objectives and goals for top management in general terms. See "Compensation
Committee Report on Executive Compensation", above. The Compensation Committee
met three times in 2005.
iii) Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is currently composed of
Messrs. Ian MacGregor (Chairman), David K. Fagin and Michael Martineau, each of
whom has been determined by the Board to be unrelated, an outside member with no
other affiliation with the Corporation and independent as defined by the
American Stock Exchange. The Nominating and Corporate Governance Committee
advises and makes recommendations to the Board concerning all corporate
governance issues, including: Board and committee jurisdiction, composition,
size and remuneration, adoption and implementation of policies designed to
ensure that the Corporation follows best practices in corporate governance; and
oversight of compliance with legislation, rules, regulations and guidelines
enacted and adopted by governments, securities regulators and stock exchanges to
whose jurisdiction the Corporation is subject.
The Nominating and Corporate Governance Committee is responsible for the
assessment of the effectiveness and contribution of the Board, its committees
and individual directors. The Nominating and Corporate Governance Committee
annually reviews the overall performance of the Board and its committees based
on a number of factors including the Board's performance in meeting the
challenges that faced the Corporation over the previous twelve month period, the
Board's relationship with management, and the responses to a questionnaire
circulated to help assess the overall effectiveness of the Board and its
members.
The Board periodically reviews the adequacy and form of compensation of
directors in relation to the responsibilities and risks involved in being an
effective director. See "Compensation of Directors" above. In addition to cash
compensation, the directors receive options under the Stock Option Plan. The
Board believes the emphasis on compensation through options is particularly
appropriate in a resource business where increasing shareholder value is a
significant relevant measure of progress.
24
The Nominating and Corporate Governance Committee is also responsible for
recommending nominees to the Board for eventual proposal as candidates for
election as directors at the annual meeting of shareholders. The Nominating and
Corporate Governance Committee considers candidates for Board membership who are
suggested by members of the Nominating and Corporate Governance Committee, other
Board members, members of management and shareholders of the Corporation. Once
the Nominating and Corporate Governance Committee has identified prospective
nominees for directorship, the Board is responsible for selecting such
candidates. The Nominating and Corporate Governance Committee seeks to identify
director candidates with business and other appropriate experience and
expertise, having regard for the nature of the Corporation's business and the
current composition of the Board, and commitment to devoting the time and
attention necessary to fulfill their duties to the Corporation. The Nominating
and Corporate Governance Committee also considers the independence of directors
or potential directors. The Nominating and Corporate Governance Committee met
once in 2005.
Shareholders wishing to recommend a director candidate to serve on the Board may
do so by providing written notice to the Chairman of the Nominating and
Corporate Governance Committee, Golden Star Resources Ltd., 10901 West Toller
Drive, Suite 300, Littleton, Colorado, USA 80127, that identifies the candidate,
provides appropriate biographical and background materials, evidences the
nominating shareholder's Common Share ownership, and includes a written signed
statement of the candidate. Assuming that the appropriate information and
materials are received in a timely manner, candidates recommended by
shareholders will be evaluated against the criteria outlined above. A complete
copy of the procedures to be followed by shareholders who wish to recommend
director candidates is available on the Corporation's website (www.gsr.com).
iv) Sustainability Committee
The Sustainability Committee is currently composed of Messrs. Michael Martineau
(Chairman), James Askew and Ian MacGregor. The primary purposes of the
Sustainability Committee are to assist the Board in its oversight of
exploration, development and operating risk, including issues related to
geological, mining, metallurgical, community relationships, health, safety and
environmental matters. The responsibilities of the Sustainability Committee
include, among others: reviewing with management the Corporation's goals,
policies and programs relative to exploration, development and operational
matters; making enquiries of management concerning the establishment of
appropriate policies, systems, standards and procedures for all technical,
development and operating activities, and compliance with applicable laws and
standards of corporate conduct; reviewing with management the assessment,
reduction and mitigation of technical risk; reviewing with management the risk
analysis of any proposed new major exploration, development or operating
activity; and reviewing with management the Corporation's record of performance
on community relationships, health, safety and environmental matters, along with
any proposed actions based on the record of performance. The Sustainability
Committee met five times in 2005.
25
Assessments
The Nominating and Corporate Governance Committee performs, as part of its
duties, an annual appraisal of the performance of the Board and its standing
committees as a whole and of the individual performance of each director and the
Board and committee chairs. The results are used in making any required changes
to functions and individuals and in determining nominations for re-election and
appointment.
Shareholder Communications
The Corporation believes that it is important to maintain good shareholder
relations. The Board will give appropriate attention to all written
communications that are submitted by shareholders. Any shareholder wishing to
send communications to the Board, or a specific committee of the Board, should
send such communication to the Chief Financial Officer and Secretary of the
Corporation by email to amarter@gsr.com or by mail to Board of Directors, c/o
Chief Financial Officer, Golden Star Resources Ltd., 10901 West Toller Drive,
Suite 300, Littleton, Colorado, USA 80127. All communications shall state the
type and amount of the Corporation's securities held by the shareholder and
shall clearly state that the communication is intended to be shared with the
Board, or if applicable, with a specific committee of the Board. The Chief
Financial Officer and Secretary shall forward all such communications to the
Board or the specific committee, as appropriate.
Director Attendance at Shareholder Meetings
All members of the Board are expected to attend annual meetings of shareholders.
All of the then directors of the Corporation attended the 2005 annual meeting of
shareholders.
PRINCIPAL ACCOUNTING FIRM FEES
------------------------------
The Corporation incurred the following fees for services performed by its
principal accounting firm, PricewaterhouseCoopers LLP, during fiscal 2005 and
2004:
--------------------------------------------------------------------------------
Audit All Other
Year Audit Fees Related Fees Tax Fees Fees Total
--------------------------------------------------------------------------------
2005 $482,886 $23,082 $ 57,888 $100,653 $664,510
--------------------------------------------------------------------------------
2004 $457,311 $57,307 $ 28,517 $162,088 $705,223
--------------------------------------------------------------------------------
Audit related fees included review of documents required for the sale of Common
Shares and for review of annual reports filed with government agencies in the
United States, Canada and France. Tax related fees include assistance in filing
annual tax returns and tax planning. Other fees were predominantly related to
accounting issues related to acquisitions and to miscellaneous general business
topics.
26
In 2005 and 2004, 100% of our auditor's fees were approved pursuant to the
provisions of 17 CFR 210.201(c)(7)(i)(C). There were no hours expended on the
principal account's engagement to audit our financial statements for the years
ended December 31, 2005 and December 31, 2004 that were attributable to work
performed by persons other than the principal accountant's full-time, permanent
employees.
The Audit Committee of the Board has considered the level of non-audit services
provided by the auditors in its determination of auditor independence.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditor
The Audit Committee has established a policy requiring pre-approval of all audit
engagement letters and fees for all auditing services (including providing
comfort letters in connection with securities underwritings) and all permissible
non-audit services performed by the independent auditors. Such services may be
approved at a meeting of the Audit Committee, or the Audit Committee may
delegate to one or more of its members the pre-approval of audit services and
permissible non-audit services provided that any pre-approval by such member or
members shall be presented to the Audit Committee at each of its scheduled
meetings.
LIABILITY INSURANCE
-------------------
The Corporation has purchased insurance and has, in addition, agreed to
indemnify directors and officers of the Corporation against all costs, charges
and expenses reasonably incurred by them in respect of certain proceedings to
which they may be made party by reason of their status as a director or officer
of the Corporation. The indemnification is extended to directors and officers
provided that they have acted honestly and in good faith with a view to the best
interests of the Corporation and, in the case of a criminal or administrative
action or proceeding that is enforced by a monetary penalty, on the condition
that the director or officer had reasonable grounds for believing his conduct
was lawful. The amount of the premium paid in 2005 in respect of directors and
officers as a group was $271,150; the policy coverage is $20,000,000 per claim
and in aggregate in any policy year. Expenses for the Corporation per claim not
covered by the policy range between nil and $150,000.
INDEBTEDNESS OF DIRECTORS AND OFFICERS
--------------------------------------
No directors, nominees for election as directors, executive officers or members
of their immediate family were indebted to the Corporation, directly or
indirectly, at any time since the beginning of the Corporation's last fiscal
year.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Relationships
Certain directors and officers of the Corporation are and may continue to be
involved in the mining and mineral exploration industry through their direct and
indirect participation as a director or otherwise in corporations, partnerships
or joint ventures, which are potential competitors. Situations may arise in
connection with potential acquisitions and investments where the other interests
of these directors and officers may conflict with the interests of the
Corporation. As required by law, each of the directors of the Corporation is
required to disclose any potential conflict of interest and to act honestly, in
good faith and in the best interests of the Corporation.
27
During 2005, the Corporation obtained legal services from a legal firm to which
Mr. MacGregor, a director and Chairman of the Board, is counsel. The total value
of all legal services provided was $1.2 million. Mr. MacGregor did not
personally perform any legal services for the Corporation during 2005 nor did he
benefit directly or indirectly from payments made by the Corporation for the
services performed by the firm.
Pursuant to the Executive Employment Agreement, Bluestar, whose principal is
Michael A. Terrell will be paid $20,833.00 per month until July 2007, for
management services provided to St. Jude. If the Executive Employment Agreement
is terminated within 24 months of a change in control of the Corporation,
Bluestar will be entitled to a termination payment equal to 12 times $20,833.00
multiplied by a fraction, the numerator of which will be six plus one for each
year since 1987 (being the year in which Michael A. Terrell was first employed
by St. Jude) and the denominator of which will be 12.
Compensation Committee and Insider Participation
Messrs. James E. Askew and Ian MacGregor were members of the Compensation
Committee in 2005. Mr. MacGregor has never been an officer or employee of the
Corporation. Mr. Askew was President of the Corporation from March 1999 through
October 1999. All relationships between these directors and the Corporation and
its subsidiaries required to be disclosed have been disclosed elsewhere in this
Management Information Circular.
Related Transactions
No insider of the Corporation, nor any associate or affiliate of an insider, has
had any material interest in any transaction or proposed transaction which has
materially affected or would materially affect the Corporation or any of its
subsidiaries, nor has any director of the Corporation been involved, directly or
indirectly, in any business or professional relationship with the Corporation in
connection with the provision by the director or the Corporation of property,
services or financing to the other since January 1, 2005 other than as set forth
herein or as previously disclosed.
PARTICULARS OF MATTERS TO BE ACTED UPON
---------------------------------------
To the knowledge of the Board of the Corporation, the only matters to be brought
before the Meeting are those matters set forth in the accompanying Notice of
Meeting relating to the receipt of financial statements and the Auditors' Report
thereon, the election of directors, the appointment of auditors and the approval
of an amendment to the Corporation's By-laws.
28
(a) Report to Shareholders
----------------------
The Board of the Corporation has approved all of the information in the Report
to Shareholders that accompanies this Management Information Circular, including
the audited consolidated financial statements delivered therewith for the fiscal
year ended December 31, 2005.
(b) Election of Directors
---------------------
The term of office of the current directors of the Corporation will expire at
the Meeting or when their successors are duly elected or appointed. The Articles
of the Corporation provide that the number of directors shall consist of a
minimum of three and a maximum of 15 directors. The Board is currently composed
of seven directors, three of whom are Canadian residents. The Corporation's
By-laws require that at least 25% of the directors of the Corporation be
resident Canadians.
It is proposed to nominate the six persons listed below for election as
directors of the Corporation to hold office until the next annual meeting of
shareholders or until their successor is elected or appointed pursuant to
relevant provisions of the By-laws of the Corporation or the Corporation's
governing statute. All such proposed nominees are currently directors of the
Corporation.
It is the intention of the management designees, if named as proxy, to vote for
the election of the following persons to the Board. Management does not
contemplate that any of such nominees will be unable to serve as directors;
however, if for any reason any of the proposed nominees do not stand for
election or are unable to serve as such, proxies in favour of management
designees will be voted for another nominee in their discretion unless the
shareholder has specified in his proxy that his Common Shares are to be withheld
from voting in the election of directors. Each director elected will hold office
until the next annual general meeting of Shareholders or until his successor is
duly elected, unless his office is earlier vacated in accordance with the
By-laws of the Corporation.
In order to be effective, this ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution. The following table sets forth the name of each of the persons
proposed to be nominated for election as a director; his municipality, province
or state and country of residence; all positions and offices in the Corporation
presently held by him; his present and past principal occupation or employment
for the past five years; the date of his first appointment as a director; and
his age. See "Voting Shares and Security Ownership of Certain Beneficial Owners
and Management" for the number of Common Shares of the Corporation that each
nominee has advised are beneficially owned by him, directly or indirectly, or
over which control or direction is exercised.
29
Name, Residence and Date of First
Position with Appointment
Corporation Present and Principal Occupation for the Past Five Years as Director Age
------------------------------------------------------------------------------------------------------------------------
JAMES E. ASKEW Mr. Askew has served as a director, President and Chairman of June 15, 1999 57
Denver, Colorado, USA International Mining and Finance Company since January 1997.
Director (1)(4) Mr. Askew has held positions as Managing Director and Chief
Executive Officer of Black Range Minerals NL from November 1999
to 2001. Mr. Askew also serves as a director of Ausdrill
Limited, Yamana Gold Inc., Climax Mining Limited and Sino Gold
Limited. In addition, Mr. Askew served as President and Chief
Executive Officer of the Corporation from March 1999 to October
1999.
------------------------------------------------------------------------------------------------------------------------
PETER J. BRADFORD Mr. Bradford has served as President and Chief Executive Officer August 8, 2000 47
Bogoso, Ghana of the Corporation since November 1999 and as a member of the
Director, President and Board since August 2000. In addition, Mr. Bradford has served
Chief Executive Officer as a director of Anvil Mining Limited since September 1998 and
as Managing Director of Anvil Mining from May 1998 to October
1999.
------------------------------------------------------------------------------------------------------------------------
DAVID K. FAGIN Mr. Fagin has served, since 1986 as a director or trustee of May 15, 1992(5) 68
Englewood, Colorado, USA certain public mutual funds managed by T. Rowe Price Associates,
Director (2)(3) Inc., as director of Canyon Resources Corporation since January
1999 and of Pacific Rim Mining Company since April 2002. In
addition he was formerly President and Chief Operating Officer
of Homestake Mining Company and previously served as an office
and/or director of several other mining and petroleum concerns.
------------------------------------------------------------------------------------------------------------------------
IAN MacGREGOR Mr. MacGregor has served as Chairman of the Board since January April 3, 2000 71
Toronto, Ontario, Canada 27, 2004. Mr. MacGregor serves on the boards of other Canadian
Director (1)(2)(3)(4) public and private companies, including serving as a director of
Asian Mineral Resources Limited since July 2004. He has been
Counsel of Fasken Martineau DuMoulin LLP (Barristers and
Solicitors) since February 2000 and prior thereto, was a partner
of Fasken Martineau DuMoulin LLP and its predecessors.
------------------------------------------------------------------------------------------------------------------------
MICHAEL P. MARTINEAU Mr. Martineau is a founder and has served as President of AXMIN May 20, 2004 61
Hildenborough, Kent, Inc. since January 1999. He was a director of Ashanti
United Kingdom Goldfields from February 1999 to April 2004. In addition, Mr.
Director (3)(4) Martineau has served as Deputy Chairman since February 2000 and
as Chief Executive Officer from February 2000 to August 2002 of
Eurasia Mining plc, and he has been a director of Angus and Ross
plc since April 2000.
------------------------------------------------------------------------------------------------------------------------
MICHAEL A. TERRELL(6) Mr. Terrell is a founder and has served as President, Chief December 21, 2005 58
Delta, British Columbia, Executive Officer and Director of St. Jude from 1987 until its
Canada acquisition by the Corporation in December 2005.
Director
------------------------------------------------------------------------------------------------------------------------
30
Notes:
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating and Corporate Governance Committee.
(4) Member of the Sustainability Committee.
(5) May 15, 1992 represents the date of the Corporation's formation upon the
amalgamation of Golden Star Resources Ltd. and South American Goldfields
Inc., of which companies Mr. Fagin was the Chairman.
(6) Mr. Terrell became a director upon the acquisition of St. Jude by the
Corporation.
There are no family relationships among any of the director nominees or
directors or executive officers of the Corporation.
See "Statement of Corporate Governance Practices" for information on Board
committees and directors' meeting attendance.
Unless otherwise indicated in the Proxy, it is management's intention to vote
the proxies in favour of the election of the above directors.
(c) Appointment of Auditor
----------------------
It is proposed to approve an ordinary resolution to appoint the firm of
PricewaterhouseCoopers LLP as auditor of the Corporation to hold office until
the close of the next annual general meeting of shareholders or until
PricewaterhouseCoopers LLP is removed from office or resigns as provided by law
and by the Corporation's By-laws and to authorize the directors of the
Corporation to fix the remuneration of PricewaterhouseCoopers LLP as auditors of
the Corporation. Representatives of PricewaterhouseCoopers LLP will be present
at the Meeting with the opportunity to make a statement if they desire to do so
and to respond to appropriate shareholder questions.
In order to be effective, an ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution.
Unless otherwise indicated in the Proxy, it is management's intention to vote
the proxies in favour of the appointment of the above auditor and to authorize
the directors of the Corporation to fix the remuneration of
PricewaterhouseCoopers LLP as auditors.
31
(d) Approval of the By-Law Resolution
---------------------------------
By resolution effective as of March 9, 2006, the Board authorized and approved
an amendment to the Corporation's By-Law Number One (the "By-Law"), the purpose
of which is to amend the provisions regarding setting a record date for
shareholder meetings in order to conform to the current provisions of the Canada
Business Corporations Act (the "CBCA"). Specifically, the outside date for a
shareholder meeting following a record date is increased from 50 to 60 days. The
amendment to the By-Law became effective upon being approved by the Board;
however, under the CBCA, the Board is required to submit a resolution to
shareholders at the Meeting, at which time the shareholders may confirm, reject
or amend the amendment to the By-Law. Accordingly, the shareholders are being
asked to consider and, if deemed advisable, confirm the following ordinary
resolution (the "By-Law Resolution").
The following sets out Section 8.06 of the By-Law, as amended, in its entirety:
"8.06 Record Date for Notice. - The board may fix in advance a date,
preceding the date of any meeting of shareholders by not more than 60 days
and not less than 21 days, as a record date for the determination of the
shareholders entitled to notice of the meeting. If no record date is so
fixed, the record date for the determination of the shareholders entitled
to receive notice of the meeting shall be at the close of business on the
day immediately preceding the day on which the notice is given, or if no
notice is given, the day of which the meeting is held."
The text of the By-Law Resolution to be considered at the Meeting will be
substantially as follows:
"BE IT RESOLVED THAT:
(a) the amendment of Section 8.06 of By-Law Number One as set forth in
management information circular of Golden Star Resources Ltd. (the
"Corporation") dated March 31, 2006 is hereby confirmed and approved; and
(b) any officer or director of the Corporation is hereby authorized and
directed for and on behalf of the Corporation to execute and deliver or
cause to be executed and delivered, all such documents, agreements and
instruments as are necessary or desirable to give effect to the foregoing
resolution, and to perform or cause to be performed all such other acts and
things as in such person's opinion may be necessary or desirable to give
full effect to the foregoing resolution and the matters authorized thereby,
such determination to be conclusively evidenced by the execution and
delivery of such document, agreement or instrument or doing any such act or
thing."
The Board has determined that the By-Law Resolution is in the best interests of
shareholders and unanimously recommends that shareholders vote FOR the By-Law
Resolution. In order to be effective, the By-Law Resolution requires the
approval of a majority of the votes cast by shareholders who vote in respect of
the resolution, failing which the amendment to the By-Law will cease to be
effective.
32
AVAILABILITY OF DOCUMENTS
-------------------------
Financial information regarding the Corporation can be found in the following
documents, which documents have been filed or will be filed with various
securities commissions or similar authorities in the United States and various
provinces of Canada and copies of which may be obtained, after filing, by
shareholders of the Corporation on request without charge from the Secretary of
Golden Star Resources Ltd., 10901 West Toller Drive, Suite 300, Littleton,
Colorado, USA 80127 (Tel.: (303) 830-9000; Toll Free: (800) 553-8436; Fax: (303)
830-9094):
(a) the Corporation's Annual Report on Form 10-K or Annual Information
Form for the year ended December 31, 2005, as may be amended, together
with any document, or the pertinent pages of any document,
incorporated by reference therein and management's discussion and
analysis of the financial condition and results of operations; and
(b) comparative audited consolidated financial statements of the
Corporation and the notes thereto as at and for the fiscal years ended
December 31, 2005, 2004 and 2003, together with the report of the
auditors thereon, and any interim financial statements of the
Corporation that may be subsequently filed and management's discussion
and analysis of the financial condition and results of operations.
Additional information relating to the Corporation is available on The System
for Electronic Document Analysis & Retrieval (or SEDAR) at www.sedar.com.
ACCOMPANYING FINANCIAL INFORMATION AND INCORPORATION BY REFERENCE
-----------------------------------------------------------------
The following financial statements and information of the Corporation accompany
and form part of, and are specifically incorporated by reference into, this
Management Information Circular: (a) Consolidated Balance Sheets as of December
31, 2005 and 2004, and Consolidated Statements of Operations, Consolidated
Statement of Changes in Shareholders' Equity, and Consolidated Statements of
Cash Flows for the years ended December 31, 2005, 2004 and 2003; (b) the Notes
to the Consolidated Financial Statements; (c) the Auditors' Report on such
financial statements; (d) the report on Management's Responsibility for
Financial Information; and (e) Management's Discussion and Analysis of Financial
Condition and Results of Operations. These documents are available on SEDAR at
www.sedar.com and a copy of any such document may be obtained free of charge
upon request by a shareholder to the Corporation as set forth under
"Availability of Documents".
The reports of the Compensation and Audit Committees and the information under
the heading "Performance Graph" shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the United States Securities Act of 1933 (the "Securities Act") or
the United States Securities Exchange Act of 1934 (the "Exchange Act"), except
to the extent we specifically incorporate this information by reference, and
shall not otherwise be deemed filed under the Securities Act or the Exchange
Act.
33
2005 ANNUAL REPORT
------------------
The Annual Report for the fiscal year ended December 31, 2005 accompanies this
Management Information Circular. The consolidated financial statements of the
Corporation, the accompanying notes and report of the independent auditors, the
selected financial data for each of the years ended December 31, 2005, 2004 and
2003 and management's discussion and analysis of the Corporation's financial
condition and results of operations are included in the Annual Report.
2007 SHAREHOLDER PROPOSALS
--------------------------
To be eligible for inclusion in the Corporation's Management Information
Circular for the year 2007 Annual Meeting of Shareholders, shareholder proposals
prepared in accordance with the proxy rules must be received at the
Corporation's corporate office, 10901 West Toller Drive, Suite 300, Littleton,
Colorado, USA 80127, Attention: Corporate Secretary, on or before January 8,
2007.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
The Corporation's officers, directors and more than 10% shareholders are
required to file beneficial ownership reports under Section 16(a) of the
Exchange Act, generally within two days of the event triggering the requirement
to file such a report. Based solely on the review of the section 16(a) reports
filed by the directors and executive officers, and upon representations from
those persons, the Corporation is not aware of any delinquent filings.
OTHER MATTERS
-------------
Management of the Corporation is not aware of any other matters to come before
the Meeting other than as set forth in the Notice of the Meeting. If any other
matter properly comes before the Meeting, it is the intention of the persons
named in the enclosed Proxy to vote the Common Shares represented thereby in
accordance with their best judgment on such matter.
GENERAL
-------
All matters to be brought before the Meeting require, for the passing of same, a
simple majority of the votes cast in person or by proxy at the Meeting by the
holders of Common Shares. If a majority of the Common Shares represented at the
Meeting should be withheld from voting for the appointment of
PricewaterhouseCoopers LLP as auditors of the Corporation, the Board will
appoint another firm of chartered accountants based upon the recommendation of
the audit committee, which appointment for any period subsequent to the next
annual general meeting of shareholders will be subject to approval by the
shareholders at that meeting.
34
APPROVAL
--------
The contents and mailing of this Management Information Circular have been
approved by the Board of Directors of the Corporation.
DATED this 7th day of April, 2006.
ON BEHALF OF THE MANAGEMENT OF GOLDEN STAR RESOURCES LTD.
"Peter J. Bradford " "Allan J. Marter"
------------------------------------- ----------------------------------
Peter J. Bradford Allan J. Marter
President and Chief Executive Officer Senior Vice President and
Chief Financial Officer
35
GOLDEN STAR RESOURCES LTD.
ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS - MAY 26, 2006
PROXY
THIS PROXY IS SOLICITED BY MANAGEMENT OF THE CORPORATION
The undersigned holder of common shares in the capital stock of Golden Star
Resources Ltd. (the "Corporation") hereby nominates and appoints Peter J.
Bradford, President and Chief Executive Officer of the Corporation, or failing
him, Allan J. Marter, Senior Vice President, Chief Financial Officer and
Secretary of the Corporation, or instead of them or any of them,
____________________, as the proxy of the undersigned to attend, act and vote in
respect of all common shares of the Corporation registered in the name of the
undersigned at the Annual General and Special Meeting (the "Meeting") of
shareholders of the Corporation to be held at 1:30 p.m. (Toronto time) on
Friday, May 26, 2006 at the TSX Broadcast & Conference Centre - Gallery
Facility, 130 King Street West, Toronto, Ontario, Canada, M5X 1J2, and at any
and all adjournments thereof. Without limiting the general powers hereby
conferred, the said proxy is directed to vote as follows, provided that, if no
choice is specified herein, or if any instructions given are not clear, the
common shares shall be voted as if the shareholder had specified an affirmative
vote:
1. To elect the following persons as
directors of the Corporation:
James E. Askew For__ Withhold__ The undersigned hereby revokes any
instrument of proxy heretofore given
Peter J. Bradford For__ Withhold__ with reference to the said Meeting or
any adjournment thereof.
David K. Fagin For__ Withhold__
Ian MacGregor For__ Withhold__ The proxyholder may in his
discretion vote with respect to
Michael P. Martineau For__ Withhold__ amendments or variations to matters
identified in the Notice of Meeting or
Michael A. Terrell For__ Withhold__ to other matters which may properly come
before the Meeting or any adjournment
thereof.
2. To appoint PricewaterhouseCoopers DATED this________ day of________, 2006.
LLP as the auditors of the
Corporation and to authorize the
Board of Directors to fix the
auditors' remuneration: -------------------------------
Signature
For___ Against___
----------------------------------
Name of shareholder (Please Print)
3. To pass an ordinary resolution
approving and confirming the
amendment to By-Law Number One of ----------------------------------
the Corporation changing the
provisions regarding setting a ----------------------------------
record date for shareholder
meetings to conform to the current
provisions of the Canada Business ----------------------------------
Corporations Act. Address
For___ Against___ ----------------------------------
Number of common shares held
NOTES:
1. The common shares represented by 3. This proxy will not be valid unless
this proxy will be voted in it is dated and signed by the
accordance with the instructions shareholder or the shareholder's
given herein. IF NO CHOICE IS attorney authorized in writing or,
SPECIFIED HEREIN, OR IF ANY if the shareholder is a
INSTRUCTIONS GIVEN ARE NOT CLEAR, corporation, by a duly authorized
THE COMMON SHARES SHALL BE VOTED AS officer or attorney of the
IF THE SHAREHOLDER HAD SPECIFIED AN corporation, and ceases to be valid
AFFIRMATIVE VOTE, ALL IN THE SAME one year from its date. If the
MANNER AND TO THE SAME EXTENT AS proxy is executed by an attorney
THE SHAREHOLDER COULD DO IF THE for an individual shareholder or by
SHAREHOLDER WERE PERSONALLY PRESENT an officer or an attorney of a
AT THE MEETING. corporate shareholder, the
instrument so empowering the
officer or attorney, as the case
may be, or a notarial copy thereof,
must accompany the proxy
instrument.
2. A SHAREHOLDER HAS THE RIGHT TO 4. If this proxy is not dated in the
APPOINT A PERSON (WHO NEED NOT BE A space provided, it is deemed to
SHAREHOLDER) OTHER THAN THE PERSON bear the date on which it is mailed
DESIGNATED IN THIS PROXY TO ATTEND by the management of the
AND ACT FOR THE SHAREHOLDER AND ON Corporation.
THE SHAREHOLDER'S BEHALF AT THE
MEETING. Such right may be 5. To be effective, the instrument of
exercised by printing in the space proxy must be received by 5:00 p.m.
provided the name of the person to (Toronto time) on Wednesday, May
be appointed, in which case only 24, 2006 at the address set forth
the person so named may vote the in the accompanying return envelope
common shares at the meeting. (Attention: Proxy Department, CIBC
Mellon Trust Company, #6, 200
Queens Quay East, Toronto, Ontario,
Canada M5A 4K9).