The following discussion and analysis should be read in conjunction with our Form 10-K for the period ended December 31, 2008 and with the accompanying unaudited consolidated financial statements and related notes for the period ended September 30, 2009. The financial statements have been prepared in accordance with Canadian GAAP. For a reconciliation to accounting principles generally accepted in the United States ("US GAAP"), see Note 24 to the consolidated financial statements. This Management's Discussion and Analysis of Financial Condition and Results of Operations include information available to November 6, 2009.

OVERVIEW OF GOLDEN STAR

We are a Canadian federally-incorporated, international gold mining and exploration company producing gold in Ghana, West Africa. We also conduct gold exploration in other countries in West Africa and in South America. Golden Star Resources Ltd. was established under the Canada Business Corporations Act on May 15, 1992 as a result of the amalgamation of South American Goldfields Inc., a corporation incorporated under the federal laws of Canada, and Golden Star Resources Ltd., a corporation originally incorporated under the provisions of the Alberta Business Corporations Act on March 7, 1984 as Southern Star Resources Ltd. Our principal office is located at 10901 West Toller Drive, Suite 300, Littleton, Colorado 80127, and our registered and records offices are located at 66 Wellington St. W, 42nd floor, Box 20, Toronto Dominion Bank Tower-Toronto Dominion Centre, Toronto, ON M5K 1N6.

We own controlling interests in several gold properties in southwest Ghana:

• Through a 90% owned subsidiary, Golden Star (Bogoso/Prestea) Limited ("GSBPL"), we own and operate the Bogoso/Prestea gold mining and processing operations ("Bogoso/Prestea") located near the town of Bogoso, Ghana. We have a nominal 3.5 million tonnes per year processing facility at Bogoso/Prestea that uses bio-oxidation technology to treat refractory sulfide ore ("sulfide plant"). In addition, Bogoso/Prestea has a carbon-in-leach processing facility next to the sulfide plant which is suitable for treating oxide ores ("oxide plant"). Bogoso/Prestea produced and sold 170,499 ounces of gold in 2008.

• Through another 90% owned subsidiary, Golden Star (Wassa) Limited ("GSWL"), we own and operate the Wassa open-pit gold mine and carbon-in-leach processing plant ("Wassa"), located approximately 35 kilometers east of Bogoso/Prestea. The design capacity of the carbon-in-leach processing plant at Wassa is nominally 3.0 million tonnes per annum but varies depending on the ratio of hard to soft ore. Wassa produced and sold 125,427 ounces of gold in 2008. GSWL also owns the Hwini-Butre and Benso concessions (the "HBB properties") in southwest Ghana. The Benso mine began shipping ore to Wassa late in 2008, and the Hwini-Butre mine began shipping ore to Wassa in April 2009. The Hwini-Butre and Benso concessions are located approximately 80 and 50 kilometers, respectively, by road south of Wassa.

We also hold interests in several gold exploration projects in Ghana and elsewhere in West Africa including Sierra Leone, Burkina Faso, Niger and Côte d'Ivoire, and hold exploration properties in Suriname, Brazil and French Guiana in South America.

All of our operations, with the exception of certain exploration projects, transact business in US dollars and keep financial records in US dollars. Our accounting records are kept in accordance with Canadian GAAP. We are a reporting issuer or the equivalent in all provinces of Canada, in Ghana and in the United States and file disclosure documents with securities regulatory authorities in Canada and Ghana and with the United States Securities and Exchange Commission.

NON-GAAP FINANCIAL MEASURES

In this Form 10-Q, we use the terms "total cash cost per ounce" and "cash operating cost per ounce."

"Cost of sales" as found in our statement of operations includes all mine-site operating costs, including the costs of mining, processing, maintenance, work-in-process inventory changes including inventory write-offs and adjustments, mine-site overhead as well as production taxes, royalties, mine site depreciation, depletion, amortization, asset retirement obligation accretion and by-product credits, but does not include exploration costs, property holding costs, corporate office general and administrative expenses, impairment charges, corporate business development costs, gains and losses on asset sales, capital gains and losses on foreign currency conversions, interest expense, gains and losses on derivatives, gains and losses on investments and income tax expense/benefit.

Total cash cost per ounce for a period is equal to "Cost of sales" for the period less "mining related depreciation and amortization costs," accretion of asset retirement obligation costs and operations-related foreign currency gains and losses for the period, divided by the number of ounces of gold sold during the period.

Cash operating cost per ounce for a period is equal to "Total cash costs" for the period less royalties and production taxes, divided by the number of ounces of gold sold during the period.

                                                  For the three months ended September 30, 2009
                                                Wassa              Bogoso/Prestea           Combined
Mining operations costs                     $       27,548         $        35,689         $   63,237
Royalties                                            1,615                   1,536              3,151
Costs (to)/from metals inventory                    (2,142 )                 2,124                (18 )
Mining related depreciation and
amortization                                        16,637                  12,695             29,332
Accretion of asset retirement
obligations                                            203                     336                539

Cost of sales-GAAP                          $       43,861         $        52,380         $   96,241
Less operations-related foreign
exchange (gains)/losses                                127                    (435 )             (308 )
Less mining related depreciation and
amortization                                       (16,637 )               (12,695 )          (29,332 )
Less accretion of asset retirement
obligations                                           (203 )                  (336 )             (539 )

Total cash cost                                     27,148                  38,914             66,062

Less royalties and production taxes                 (1,615 )                (1,536 )           (3,151 )

Cash Operating Costs                                25,533                  37,378             62,911

Ounces sold                                         54,364                  53,069            107,433

Derivation of cost per ounce measures:

Total cash cost per ounce                   $          499         $           733         $      615

Cash operating cost per ounce               $          470         $           704         $      586


                                                  For the three months ended September 30, 2008
                                                Wassa              Bogoso/Prestea           Combined
Mining operations costs                     $       18,675         $        40,936         $   59,611
Royalties                                              573                   1,351              1,924
Costs (to)/from metals inventory                      (935 )                 6,278              5,343
Mining related depreciation and
amortization                                         4,715                   9,202             13,917
Accretion of asset retirement
obligations                                            129                      93                222

Cost of sales-GAAP                          $       23,157         $        57,860         $   81,017
Less operations-related foreign
exchange (gains)/losses                               (219 )                  (273 )             (492 )
Less mining related depreciation and
amortization                                        (4,715 )                (9,202 )          (13,917 )
Less accretion of asset retirement
obligations                                           (129 )                   (93 )             (222 )

Total cash cost                                     18,094                  48,292             66,386

Less royalties and production taxes                   (573 )                (1,351 )           (1,924 )

Cash Operating Costs                                17,521                  46,941             64,462

Ounces sold                                         22,083                  51,959             74,042

Derivation of cost per ounce measures:

Total cash cost per ounce                   $          819         $           929         $      897

Cash operating cost per ounce               $          793         $           903         $      871

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                                                  For the nine months ended September 30, 2009
                                                 Wassa             Bogoso/Prestea         Combined
Mining operations costs                      $       76,268        $        97,318        $ 173,586
Royalties                                             5,305                  3,909            9,214
Costs (to)/from metals inventory                     (1,212 )                2,946            1,734
Mining related depreciation and
amortization                                         50,382                 31,986           82,368
Accretion of asset retirement obligations               606                  1,010            1,616

Cost of sales-GAAP                           $      131,349        $       137,169        $ 268,518
Less operations-related foreign exchange
(gains)/losses                                         (437 )               (1,364 )         (1,801 )
Less mining related depreciation and
amortization                                        (50,382 )              (31,986 )        (82,368 )
Less accretion of asset retirement
obligations                                            (606 )               (1,010 )         (1,616 )

Total cash cost                                      79,924                102,809          182,733

Less royalties and production taxes                  (5,305 )               (3,909 )         (9,214 )

Cash Operating Costs                                 74,619                 98,900          173,519

Ounces sold                                         164,041                139,375          303,416

Derivation of cost per ounce measures:

Total cash cost per ounce                    $          487        $           738        $     602

Cash operating cost per ounce                $          455        $           710        $     572


                                                  For the nine months ended September 30, 2008
                                                 Wassa             Bogoso/Prestea         Combined
Mining operations costs                      $       49,443        $       114,106        $ 163,549
Royalties                                             2,147                  3,489            5,637
Costs (to)/from metals inventory                     (2,480 )               (3,153 )         (5,633 )
Mining related depreciation and
amortization                                         14,327                 22,878           37,205
Accretion of asset retirement obligations               286                    299              585

Cost of sales-GAAP                           $       63,723        $       137,619        $ 201,342
Less operations-related foreign exchange
(gains)/losses                                         (246 )                 (396 )           (642 )
Less mining related depreciation and
amortization                                        (14,327 )              (22,878 )        (37,205 )
Less accretion of asset retirement
obligations                                            (286 )                 (299 )           (585 )

Total cash cost                                      48,864                114,046          162,910

Less royalties and production taxes                  (2,147 )               (3,489 )         (5,636 )

Cash Operating Costs                                 46,717                110,557          157,274

Ounces sold                                          79,475                130,307          209,782

Derivation of cost per ounce measures:

Total cash cost per ounce                    $          615        $           875        $     777

Cash operating cost per ounce                $          588        $           848        $     750

Total cash cost per ounce and cash operating cost per ounce should be considered as non-GAAP financial measures as defined in SEC Regulation S-K Item 10 and in applicable Canadian securities laws and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. There are material limitations associated with the use of such non-GAAP measures. Since these measures do not incorporate revenues, changes in working capital and non-operating cash costs, they are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Changes in numerous factors including, but not limited to, mining rates, milling rates, gold grade, gold recovery, costs of labor, consumables and mine site general and administrative activities can cause these measures to increase or decrease. We believe that these measures are the same as, or similar to, the measures of other gold mining companies, but may not be comparable to similarly titled measures in every instance.

BUSINESS STRATEGY AND DEVELOPMENT

Our business and development strategy has been focused primarily on the acquisition of producing and development-stage gold properties in Ghana and on the exploration, development and operation of these properties. We have also pursued exploration activities in South America.

We acquired Bogoso in 1999 and have operated a nominal 1.5 million tonne per annum carbon-in-leach ("CIL") processing plant most of the time since then to process oxide and other non-refractory ores ("Bogoso oxide plant"). In 2001, we acquired the Prestea property located adjacent to our Bogoso property and mined surface deposits at Prestea from late 2001 to late 2006. In late 2002, we acquired Wassa, and constructed a new nominal 3.0 million tonne per annum CIL processing plant at Wassa, which began commercial operation in April 2005. In July 2007, we completed construction and development of a new nominal 3.5 million tonnes per annum processing facility at Bogoso/Prestea that uses bio-oxidation technology to treat refractory sulfide ore ("Bogoso sulfide plant").

In late 2005, we acquired the HBB properties consisting of the Benso and Hwini-Butre properties. Benso development activities started in late 2007, and in the third quarter of 2008, Benso began trucking ore to the Wassa plant for processing. Hwini-Butre development was initiated in the fourth quarter of 2008, and in April 2009 Hwini-Butre began shipping ore to the Wassa plant for processing.

Our overall objective is to grow our business to become a mid-tier gold producer. We continue to evaluate potential acquisition and merger opportunities that could further increase our annual gold production. However, we presently have no agreement or understanding with respect to any specific potential transaction.

In addition to our gold mining and development activities, we actively explore for gold in West Africa and South America, investing approximately $15.8 million on such activities during 2008 and plan to spend approximately $10 million during 2009. We are conducting regional reconnaissance projects in Ghana, Cote d'Ivoire and Sierra Leone and have drilled more advanced targets in Ghana, Niger and Burkina Faso. We are also evaluating gold properties in Brazil and in French Guiana and are participating in a gold exploration joint venture in Suriname.

TRENDS AND EVENTS IN THE NINE MONTHS ENDED SEPTEMBER 30, 2009

Gold Prices

Gold prices have generally trended upward during the last eight years, from a low of $260 per ounce in 2001 to a high of over $1,100 per ounce in November 2009. Since March 2008, gold price volatility has increased with prices fluctuating between $700 and $1,100 per ounce. The realized gold price for our shipments averaged $967 per ounce during the three months ended September 30, 2009 compared with $866 per ounce during the same period of 2008.

Hwini-Butre Development

Development work, which started at the Hwini-Butre mine in the fourth quarter of 2008, was mostly completed by April 2009, and this new operation has continuously sent ore to the Wassa plant since start-up in May 2009.

Benso Royalty Purchase

During the second quarter of 2009, we purchased, from an unrelated party, a 1.5% net smelter royalty payable on gold production from our Benso mine for $3.6 million. The royalty agreement provided us with the option to buy the royalty at any time prior to 18 months after gold production was initiated, regardless of the ownership at that date, for a specified price of Cdn$4.0 million.

The Benso and Hwini-Butre mines, which commenced mining operations late in 2008 and April 2008 respectively, provided a majority of the ore processed at Wassa in the third quarter. The higher grade ores from Benso and Hwini-Butre have resulted in a marked increase in Wassa's gold sales and revenues compared with the first nine months of 2008. Wassa's 2009 sales totaled 164,041 ounces in the first nine months of 2009, up from 79,475 ounces in the first nine months of 2008. The improved grade and resulting increase in ounces along with lower power costs, reduced Wassa's cash operating costs per ounce to $470 in the third quarter of 2009, down from $793 in the third quarter of 2008.

Bogoso's gold output increased to 139,375 ounces for the first nine months of 2009, up from 130,307 in the same period of 2008 on higher tonnes processed and better gold recoveries. In addition to the improved gold sales, Bogoso's nine month average cash operating costs fell to $710 per ounce, down from $848 per ounce in the first nine months of 2009 and third quarter cash operating cost were down $199 per ounce from prior year's third quarter level. See the Bogoso/Prestea Operations discussions below for additional details.

International Financial Reporting Standards

Golden Star is a Canadian registered company headquartered in the US and its common shares trade on both US and Canadian stock exchanges and as such is a reporting filer with securities regulators in both the US and in Canada. As noted in our recent Forms 10-Q and 10-K, in response to Canada's mandate that all Canadian companies begin reporting in IFRS on or before January 1, 2011, Golden Star has been preparing to adopt IFRS as its reporting GAAP with early adoption at January 1, 2010. In addition to the Canadian IFRS mandate, Ghanaian regulators announced in 2008 that Ghanaian companies were required to report in IFRS beginning with 2009 year-end filings.

Golden Star has, since its inception, reported in Canada using Canadian GAAP and at the same time has reported in the US using Canadian GAAP financial statements pursuant to a long-standing US accommodation which allows Canadian companies to file with US regulators using Canadian GAAP. However, upon Golden Star's conversion to IFRS, there is no assurance that future IFRS filings will be acceptable in the US. Therefore Golden Star, as a Canadian incorporated domestic (US) filer, may be required to adopt US GAAP once Canada adopts IFRS in 2011. Due to the current uncertainty of this issue, we plan to continue with IFRS adoption at our Ghanaian subsidiaries to meet the Ghanaian mandate, but IFRS adoption by our non-Ghanaian subsidiaries and for consolidated financial reporting will be put on hold until more concrete guidance is available.

Revolving Credit Facility

On May 1, 2009, we finalized an agreement for a revolving credit facility (the "Facility") with Standard Chartered Bank. The Facility provides for a fully committed revolving credit line of $30 million. As of September 30, there was $5.0 million drawn on this new facility.

The Facility carries a term of three years from signing and bears interest at the higher of LIBOR or the applicable lenders' cost of funds rate (which is capped at 1.25% per annum above LIBOR), plus a margin of 5% per annum. The Facility is secured by a pledge of shares in our significant subsidiaries and also provides for negative pledges on all other presently unsecured assets. Proceeds of the Facility will be used for working capital and general corporate purposes. The Facility is described in more detail in our Form 8-K filed May 5, 2009.

New Ghanaian National Stabilization Levy

At the end of July 2009, the Ghanaian government introduced a temporary levy on certain Ghanaian industries, including mining, brewing, banking, communications and insurance. The new law establishing the levy was made public in August 2009. The bill indicates that companies subject to the levy will pay an amount equal to 5% of "profits before tax" as disclosed on the statements of operations prepared in accordance with Ghanaian GAAP.