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Golden Star: Management Discussion & Analysis Exhibit

The following excerpt is from the company's SEC filing.

Management's Discussion and Analysis

of Financial Condition and Results of Operations

For the Three and

TABLE OF CONTENTS

OVERVIEW OF GOLDEN STAR

SUMMARY OF OPERATING AND FINANCIAL RESULTS

OUTLOOK FOR 2015

CORPORATE DEVELOPMENTS

DEVELOPMENT PROJECTS UPDATE

WASSA OPERATIONS

BOGOSO/PRESTEA OPERATIONS

SUMMARIZED QUARTERLY FINANCIAL RESULTS

LIQUIDITY AND FINANCIAL CONDITION

LIQUIDITY OUTLOOK

TABLE OF CONTRACTUAL OBLIGATIONS

RELATED PARTY TRANSACTIONS

OFF-BALANCE S HEET ARRANGEMENTS

NON-GAAP FINANCIAL MEASURES

OUTSTANDING SHARE DATA

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

CHANGES IN ACCOUNTING POLICIES

FINANCIAL INSTRUMENTS

DISCLOSURES ABOUT RISKS

CONTROLS AND PROCEDURES

ADDITIONAL INFORMATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Golden Star Resources Ltd. and its subsidiaries("Golden Star" or "the Company" or "we" or "our"). This Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Company's audited consolidated financial statements for the years ended December 31,

and the unaudited condensed interim consolidated financial statements and related notes for the three and

nine months ended September 30, 2015

, which are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). This MD&A includes information available to, and is dated,

October 28, 2015

. Unless noted otherwise, all amounts shown are in thousands of dollars, all currency amounts are stated in U.S. dollars and all information presented in this MD&A is prepared in accordance with IFRS.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This MD&A contains "forward-looking information" within the meaning of applicable Canadian securities laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, concerning the business, operations and financial performance and condition of Golden Star. Forward-looking information and statements include, but are not limited to, information or statements with respect to: the timing and amount of estimated future production and grades and associated cash operating costs per ounce; estimates of mineral reserves and mineral resources, including grades; the timing for transforming and the ability to transform Wassa and Prestea into lower cost producers; production, cash operating cost and capital spending guidance for the Company's operations at Wassa and Bogoso/Prestea in 2015; production from the Prestea Open Pits; the results of the Wassa feasibility study for combined operations and the Prestea underground preliminary economic assessment, including the post-tax internal rate of return, net present value (including assumed discount rates) and payback period; timing for first production from each of Wassa Underground Mine and Prestea Underground Mine; the life of mine at each of Wassa, Wassa Underground Mine and Prestea Underground Mine; capital costs, cash operating costs and all-in sustaining costs for each of Wassa Underground Mine and Prestea Underground Mine, and future work to be completed at each of Wassa Underground Mine and Prestea Underground Mine; the rate of decline advance at Wassa Underground and the timing for the transfer from generator to grid power; timing of receipt of outstanding environmental permits and funding at Prestea Underground Mine; the timing for the commencement of stoping at Prestea Underground; the timing of mining operations at Prestea South; the timing of the Prestea Underground feasibility study; the sources of funds and sufficiency thereof to fund operations and capital expenditures; employee severance to be incurred and expensed in 2015; the timing and amount of payments from the Streaming Agreement (as referred to herein); working capital, debt repayments and requirements for additional capital and sources of funding for operations and capital projects.

Generally, forward-looking information and statements can be identified by the use of forward-looking terminology such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes” or variations of such words and phrases (including negative or grammatical variations) or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved” or the negative connotation thereof.

Forward-looking information and statements are made based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performance or achievements of Golden Star to be materially different from future results, performance or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which Golden Star will operate in the future, including the price of gold, anticipated costs and ability to achieve goals. Certain important factors that could cause actual results, performances or achievements to differ materially from those set forth in the forward-looking information and statements include, among others, gold price volatility, discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries, mining operational and development risks, litigation risks, liquidity risks, suppliers suspending or denying delivery of products or services, regulatory restrictions (including environmental regulatory restrictions and liability), activities by governmental authorities (including changes in taxation), currency fluctuations, the speculative nature of gold exploration, the global economic climate, dilution, share price volatility, the availability of capital on reasonable terms or at all, local and community impacts and issues, results of pending or future feasibility studies, competition, loss of key employees, additional funding requirements and defective title to mineral claims or property. Although Golden Star has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information and statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.

Forward-looking information and statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, performance or achievements of Golden Star to be materially different from those expressed or implied by such forward-looking information and statements, including but not limited to: risks related to international operations, including economic and political instability in foreign jurisdictions in which Golden Star operates; risks related to current global

financial conditions; risks related to joint venture operations; actual results of current exploration activities; environmental risks; future prices of gold; possible variations in mineral reserves and mineral resources, grade or recovery rates; mine development and operating risks; an inability to obtain power for operations on favourable terms or at all; mining plant or equipment breakdowns or failures; an inability to obtain products or services for operations or mine development from vendors and suppliers on reasonable terms, including, pricing, or at all; accidents, labor disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; risks related to indebtedness and the service of such indebtedness, as well as those factors discussed in the section entitled “Risk Factors” in Golden Star's Annual Information Form for the year ended December 31, 2014. Although Golden Star has attempted to identify important factors that could cause actual results, performances and achievements to differ materially from those contained in forward-looking information and statements, there may be other factors that cause results, performance and achievements not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results, performance, and achievements and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information and statements. Forward-looking information and statements are made as of the date hereof and accordingly are subject to change after such date. Except as otherwise indicated by Golden Star, these statements do not reflect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof. Forward-looking information and statements are provided for the purpose of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of the Company's operating environment. Golden Star does not undertake to update any forward-looking information and statements that are included in this MD&A, except as required by applicable securities laws.

CAUTIONARY NOTE REGARDING RESERVES AND RESOURCES

Scientific and technical information contained in this MD&A was reviewed and approved by Dr. Martin Raffield, Senior Vice- President, Technical Services for Golden Star who is a “qualified person” as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) and by S. Mitchel Wasel, BSc Geology who is a Qualified Person pursuant to NI 43-101. Mr. Wasel is Vice President Exploration for Golden Star and an active member of the Australasian Institute of Mining and Metallurgy. All mineral reserves and mineral resources have been calculated in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) and NI 43-101. All mineral resources are reported inclusive of mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability. Information on data verification performed on, and other scientific and technical information relating to, the mineral properties mentioned in this MD&A that are considered to be material mineral properties to the Company are contained in Golden Star's Annual Information Form for the year ended December 31, 2014 and the following current technical reports for those properties available at i Wassa - "NI 43-101 Technical Report on feasibility study of the Wassa open pit mine and underground project in Ghana” effective date December 31, 2014; (ii) Bogoso - “NI 43-101 Technical Report on Resources and Reserves Golden Star Resources Ltd., Bogoso Prestea Gold Mine, Ghana” effective date December 31, 2013; and (iii) Prestea Underground - “NI 43-101 Technical Report on Preliminary Economic Assessment for the Shrinkage Mining of the West Reef Resource, Prestea Underground Mine, Ghana” effective date December 18, 2014.

Cautionary Note to U.S. Investors

This MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ materially from the requirements of United States securities laws applicable to U.S. companies. Information concerning our mineral properties has been prepared in accordance with the requirements of Canadian securities laws, which differ in material respects from the requirements of the Securities and Exchange Commission (the “SEC”) set forth in Industry Guide 7. Under the SEC's Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination, and the SEC does not recognize the reporting of mineral deposits which do not meet the SEC Industry Guide 7 definition of “Reserve”. In accordance with NI 43-101, the terms “mineral reserve”, “proven mineral reserve”, “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in accordance with CIM standards. While the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are recognized and required by NI 43-101, the SEC does not recognize them. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic viability. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves.

OVERVIEW OF GOLDEN STAR

Golden Star is an established gold producer that holds a 90% interest in the Wassa and Bogoso/Prestea gold mines in Ghana. The Company is pursuing brownfield development projects at its Wassa and Prestea mines that are expected to transform these mines into lower cost producers from 2016 onwards. The Company is a reporting issuer or the equivalent in all provinces of Canada, in Ghana and in the United States, and files disclosure documents with securities regulatory authorities in Canada, Ghana and with the SEC in the United States.

Three Months Ended

September 30,

OPERATING SUMMARY

Wassa gold sold

28,848

22,716

76,871

87,000

Bogoso/Prestea gold sold

23,050

38,454

93,404

101,703

Total gold sold

51,898

61,170

170,275

188,703

Average realized gold price

Cash operating cost per ounce - Wassa

Cash operating cost per ounce - Bogoso/Prestea

All-in sustaining cost per ounce

FINANCIAL SUMMARY

Gold revenues

56,452

77,758

198,767

242,329

Cost of sales excluding depreciation and amortization

55,199

70,774

206,140

233,502

Depreciation and amortization

30,285

18,069

Mine operating (loss)/margin

(4,272

(37,658

(9,242

General and administrative expense

11,760

13,548

(Gain)/loss on fair value of 5% Convertible Debentures

(4,911

(5,743

Impairment charges

34,396

Net (loss)/income attributable to Golden Star shareholders

(6,832

(81,462

(24,924

Adjusted net loss attributable to Golden Star shareholders

(10,831

(1,325

(35,766

(21,060

(Loss)/earnings per share attributable to Golden Star shareholders - basic and diluted

$/share

Adjusted loss per share attributable to Golden Star shareholders - basic and diluted

Cash provided by/(used in) operations

45,341

47,515

(1,905

Cash provided by/(used in) operations before working capital changes

38,508

28,417

(7,141

Cash provided by/(used in) operations per share - basic and diluted

Cash provided by/(used in) operations before working capital changes per share - basic and diluted

Capital expenditures

17,789

43,325

24,436

See "Non-GAAP Financial Measures" below for a reconciliation of cash operating cost per ounce and all-in sustaining cost per ounce to cost of sales before depreciation and amortization.

See "Non-GAAP Financial Measures" below for a reconciliation of adjusted net loss attributable to Golden Star shareholders and adjusted net loss per share attributable to Golden Star shareholders to net loss attributable to Golden Star shareholders and net loss per share attributable to Golden Star shareholders.

See "Non-GAAP Financial Measures" below for an explanation of the calculation of cash provided by/(used in) operations before working capital changes and cash used in operations before working capital changes per share.

Gold sales of

ounces in the

quarter of

were 15% lower than the

ounces sold in the same period in

Bogoso/Prestea gold sales decreased by 40% in the

compared to the same period in

mainly as a result of lower plant throughput, lower ore grade processed and lower recovery at the refractory operation as the final refractory ounces were mined during the third quarter of 2015 prior to the suspension of the refractory operation at the end of the quarter. Wassa gold sales increased by 27% due mainly to higher plant throughput, higher grade processed and higher recovery. For the

, gold sales of

ounces were 10% lower than the

, due to the lower throughput at both operations.

Consolidated cash operating cost per ounce was

, 6% lower than

$1,052

Wassa's cash operating cost per ounce was

compared to

$1,072

. The lower cash operating cost per ounce at Wassa was due to the implementation of cost cutting measures resulting in a decline in mine operating expense. The lower cash operating cost per ounce at Wassa was offset by the higher cash operating cost per ounce at Bogoso/Prestea. Even though cash operating cost at Bogoso/Prestea was 27% lower in the third quarter of 2015 compared to the third quarter of 2014, cash operating cost per ounce was higher due to lower refractory production as refractory operation was suspended at the end of the third quarter of 2015. For the

, consolidated cash operating cost per ounce was

$1,056

$1,155

Gold revenues totaled

$56.5 million

, compared to

$77.8 million

, gold revenue totaled

$198.8 million

$242.3 million

The decline in realized gold price and fewer ounces sold resulted in the decrease in revenue for both the three and nine months period ended September 30, 2015 compared to the same periods in 2014.

Cost of sales excluding depreciation and amortization in the

$55.2 million

$70.8 million

The decrease of cost of sales excluding depreciation and amortization was due to decrease in mine operating expenses at both Wassa and Bogoso/Prestea mines. Even though Wassa mined and processed more tonnes, mine operating expense reduced by 26% as a result of cost cutting measures implemented. Bogoso/Prestea cost of sales excluding depreciation and amortization reduced by 31% compared to the same prior year quarter primarily as a result of the suspension of the refractory operation and the commencement of mining and processing of lower cost Prestea oxide ore through the non-refractory plant. For the

, cost of sales excluding depreciation and amortization totaled

$206.1 million

$233.5 million

. Lower mine operating expenses as a result of less material mined at Bogoso/Prestea and lower mining and haulage costs at Wassa for the first nine months of 2015 were offset by the

$14.9 million

severance charges recognized in the period.

Depreciation and amortization expense totaled

$5.5 million

$6.3 million

The decrease in depreciation and amortization expense was mainly due to lower production at Bogoso/Prestea as well as the impairment charge on the refractory assets recorded in the second quarter of 2015.

, depreciation and amortization expense increased to

$30.3 million

$18.1 million

in the same period in 2014. The increase in depreciation and amortization expense for the nine months ended September 30, 2015 is a result of the decrease in recoverable ounces at the Bogoso/Prestea operation in 2015, offset slightly by the lower production at Wassa.

General and administrative costs totaled

$3.3 million

$3.7 million

, general and administrative costs totaled

$11.8 million

$13.5 million

. The decrease in head office costs for the three and nine months ended September 30, 2015 compared to the same periods in 2014 were mainly due to decrease in legal fees and share based compensation during the current year.

The Company recorded a non-cash fair value gain of

$4.9 million

on the 5% Convertible Debentures in the

compared to a non-cash fair value gain of

$5.7 million

This was calculated based on the discounted cash flows of the debt component and a Black-Scholes valuation of the conversion feature. The non-cash fair value gain in the third quarter of 2015 was a result of an increase in the the risk profile of the 5% Convertible Debentures. For the

, the Company recorded a non-cash fair value loss of

$0.1 million

on the 5% Convertible Debentures compared to a non-cash fair value loss of

$2.0 million

Net loss attributable to Golden Star shareholders for the

$6.8 million

loss per share, compared with a net income of

$2.6 million

earnings per share for the same period in

. Adjusted net loss attributable to Golden Star shareholders (see "Non-GAAP Financial Measures" section) was

$10.8 million

$1.3 million

For the three months ended September 30, the net loss in 2015 compared to net income in 2014 is a result of lower production...


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