STOCK BASED COMPENSATION

Non-cash employee compensation expense recognized in general and administrative expense in the statements of operations with respect to the Plan are as follows:



	For the years ended December 31
	2011		2010		2009
Total stock compensation expense	$	3,385	$	2,975	$	2,032

STOCK OPTIONS

We have one stock option plan, the Third Amended and Restated 1997 Stock Option Plan (the “Plan”) approved by shareholders in May 2010, under which options are granted at the discretion of the Board of Directors. Options granted are non-assignable and are exercisable for a period of ten years or such other period as stipulated in a stock option agreement between Golden Star and the optionee. Under the Plan, we may grant options to employees, consultants and directors of the Company or its subsidiaries for up to 25,000,000 shares, of which 9,030,346 are available for grant as of December 31, 2011, and the exercise price of each option is not less than the closing price of our shares on the Toronto Stock Exchange on the day prior to the date of grant. Options typically vest over periods ranging from immediately to three years from the date of grant. Vesting periods are determined at the discretion of the Board of Directors.

We granted 2,288,000 and 1,598,500 options during 2011 and 2010, respectively. We do not receive a tax deduction for the issuance of options. As a result, we do not recognize any income tax benefit related to the stock compensation expense.

The fair value of our option grants are estimated at the grant dates using the Black-Scholes option-pricing model. Fair values of options granted in 2011, 2010 and 2009 were based on the assumptions noted in the following table:



	For the years ended December 31
	2011	2010	2009
Expected volatility	66.06% to 70.29%	68.67% to 77.37%	68.39 to 74.25%
Risk-free interest rate	0.90% to 2.26%	1.18% to 2.58%	1.88% to 2.94%
Expected lives	6 to 9 years	6 to 9 years	4 to 7 years
Dividend yield	0%	0%	0%

Expected volatilities are based on the mean reversion tendency of the volatility of Golden Star's shares. Golden Star uses historical data to estimate share option exercise and employee departure behavior is used in the Black-Scholes model. Groups of employees that have dissimilar historical behavior are considered separately for valuation purposes. The expected term of the options granted represents the period of time that the options granted are expected to be outstanding; the range given above results from certain groups of employees exhibiting different post-vesting behaviors. The risk-free rate for periods within the contractual term of the option is based on the Canadian Chartered Bank administered interest rates in effect at the time of the grant.

A summary of option activity under the Plan during the year ended December 31, 2011:



	Options (000)		Weighted- Average Exercise price (Cdn$)	Weighted- Average Remaining Contractual Term (Years)	Aggregate intrinsic value Cdn($000)
Outstanding as of December 31, 2010	6,724		3.35	7.0	9,001
Granted	2,288		2.67	9.3	—
Exercised	(159	)	1.78	4.6	—
Forfeited, canceled and expired	(314	)	3.67	6.8	—
Outstanding as of December 31, 2011	8,539		3.18	7.0	95
Exercisable at December 31, 2011	6,233		3.3	6.2	95

A summary of option activity under the Plan as of December 31, 2010, and changes during the year then ended is presented below:



	Options (000)		Weighted- Average Exercise price (Cdn$)	Weighted- Average Remaining Contractual Term (Years)	Aggregate intrinsic value Cdn($000)
Outstanding as of December 31, 2009	7,283		3.19	7.0	4,221
Granted	1,599		3.77	9.3	—
Exercised	(1,149	)	2.11	5.4	2,423
Forfeited, canceled and expired	(1,009	)	4.27	—	—
Outstanding as of December 31, 2010	6,724		3.35	7.0	9,001
Exercisable at December 31, 2010	4,622		3.48	6.3	5,770

The number of options outstanding by strike price as of December 31, 2011, and 2010 is shown in the following tables:



	Options outstanding			Options exercisable
Range of exercise prices (Cdn$)	Number outstanding at December 31, 2011 (000)	Weighted- average remaining contractual life (years)	Weighted- average exercise price (Cdn$)	Number exercisable at December 31, 2011 (000)	Weighted- average exercise price (Cdn$)
0 to 2.50	1,619	7.2	1.66	1,215	1.64
2.51 to 4.00	5,688	7.3	3.22	3,901	3.32
4.01 to 7.00	1,232	4.8	5	1,117	5.02
	8,539	6.9	3.18	6,233	3.29



	Options outstanding			Options exercisable
Range of exercise prices (Cdn$)	Number outstanding at December 31, 2010 (000)	Weighted- average remaining contractual life (years)	Weighted- average exercise price (Cdn$)	Number exercisable at December 31, 2010 (000)	Weighted- average exercise price (Cdn$)
0 to 2.50	1,472	7.5	1.61	804	1.53
2.51 to 4.00	3,965	7.2	3.43	2,845	3.44
4.01 to 7.00	1,287	6.0	4.98	973	5.10
	6,724	7.0	3.35	4,622	3.48

The weighted-average grant date fair value of share options granted during the years ended December 31, 2011, 2010 and 2009 was Cdn$1.78, Cdn$2.54 and Cdn$1.21, respectively. The intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was Cdn$0.3 million, Cdn$2.4 million and Cdn$1.7 million, respectively.

A summary of the status of non-vested options at December 31, 2011, and 2010 and changes during the years ended December 31, 2011 and 2010, is presented below:



	Number of options (000)		Weighted average grant date fair value (Cdn$)
Non-vested at January 1, 2011	2,102		1.9
Granted	2,288		1.78
Vested	(1,988	)	1.81
Forfeited, canceled and expired	(95	)	2.14
Non-vested at December 31, 2011	2,307		1.91

	Number of options (000)		Weighted average grant date fair value (Cdn$)
Non-vested at January 1, 2010	2,125		1.49
Granted	1,599		2.54
Vested	(1,491	)	1.94
Forfeited, canceled and expired	(131	)	1.73
Non-vested at December 31, 2010	2,102		1.9

As of December 31, 2011, there was a total unrecognized compensation cost of Cdn$2.7 million related to share-based compensation granted under the Plan. That cost is expected to be recognized over a weighted-average period of 1.8 years. The total fair values of shares vested during the years ended December 31, 2011, 2010 and 2009 were Cdn$3.6 million, Cdn$2.9 million and Cdn$2.4 million, respectively.

Stock Bonus Plan

In December 1992, we established an Employees' Stock Bonus Plan (the “Bonus Plan”) for any full-time or part-time employee (whether or not a director) of the Company or any of our subsidiaries who has rendered meritorious services which contributed to the success of the Company or any of its subsidiaries. The Bonus Plan provides that a specifically designated committee of the Board of Directors may grant bonus common shares on terms that it might determine, within the limitations of the Bonus Plan and subject to the rules of applicable regulatory authorities. The Bonus Plan, as amended, provides for the issuance of 900,000 common shares of bonus stock, of which 545,845 common shares had been issued as of December 31, 2011. No shares were issued to employees under the Bonus Plan during 2011, 2010 and 2009.

Deferred Share Units

On March 9, 2011, the Board adopted a Deferred Share Unit Plan (“DSU plan”) which was subsequently approved by shareholders at the May 2011 annual meeting. The DSU Plan creates Deferred Share Units (“DSUs”), each representing the right to receive one share of Golden Star common stock upon redemption. DSUs may be redeemed only upon termination of the holder's services to the Company, and may be subject to vesting provisions. DSU awards are granted at the sole discretion of the Company's compensation committee. The DSU Plan allows directors, at their option, to receive all or any portion of their retainer by accepting DSUs in lieu of cash.

The compensation committee may also award DSUs to executive officers and/or directors in lieu of cash as a component of their long term performance compensation, the amount of such awards being in proportion to the officer's or director's achievement of pre-determined performance goals. As with DSU awards for directors' retainers, DSUs received as performance compensation are redeemable only upon termination of the holder's services to the Company. The Company may, at its option, provide cash in lieu of common shares upon a holder's redemption, the cash value being established by the share price on the DSU original award date, less all applicable tax withholding.

In 2011, the Company granted 22,147 units to directors of the Company in payment of fees earned in 2011. These units were immediately vested. The Company recognized compensation expense related to DSUs of $49,473. As of December 31, 2011, there was nil unrecognized compensation expense related to DSUs granted under the Company's DSU plan. There were 22,147 DSUs outstanding at December 31, 2011.