Exploration Agreement (english Trans)

CERTIFICATE OF TRANSLATION


I, Carlos H. Bertoni, Vice President, Exploration of Golden Star Resources Ltd. (the "Company") declare to the best of my knowledge that the attached is an accurate English translation of the Exploration Agreement dated May 13, 1996 between Southern Star Resources Ltd., Estrela Sul do Brasil Empreendimentos Ltda and Companhia Vale do Rio Doce and Rio Doce Geologia e Mineracao S.A.


/s/ Carlos H. Bertoni
-----------------------------
Carlos H. Bertoni
Vice President, Exploration


State of Colorado ) County of Denver ) ss.


Subscribed and sworn to before me this 26th day of March, 1997 by Carlos H. Bertoni.


/s/ Nathalie Defferard
-----------------------------
Notary Public


My Commission Expires: October 25, 1999.


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AGREEMENT FOR CARRYING OUT MINERAL
EXPLORATION AND PROMISE OF
ASSOCIATION FOR THE ECONOMIC
EXPLOITATION OF ORE DEPOSITS,
ENTERED INTO BETWEEN COMPANHIA VALE
DO RIO DOCE AND RIO DOCE GEOLOGIA E
MINERACAO S.A., ON THE ONE SIDE, AND
SOUTHERN STAR RESOURCES LTD. AND
ESTRELA SUL DO BRASIL
EMPREENDIMENTOS LTDA., ON THE OTHER
SIDE.


COMPANHIA VALE DO RIO DOCE, a Brazilian company, having its head office in this City, at Av. Graca Aranha no. 26, enrolled in the Corporate Taxpayers Record File (CGC - MF) under no. 33.592.510/0001-54, hereinafter referred to as CVRD, and its subsidiary RIO DOCE GEOLOGIA E MINERACAO S.A., having its head office in this City, at Rua Santa Luzia no. 651 - 17th floor, enrolled in the Corporate Taxpayers Record File (CGC - MF) under no. 34.230.763/0001-40, hereinafter referred to as DOCEGEO, and


SOUTHERN STAR RESOURCES, LTD., a company incorporated and existing under the laws of Barbados, having its head office at no. 1700 Lincoln Street, suite 1950, Denver, Colorado, U.S.A., hereinafter referred to as SOUTHERN, and its Brazilian subsidiary ESTRELA SUL DO BRASIL EMPREENDIMENTOS LTDA., having its head office in this City, at Av. Nilo Peganha no. 50, suite 1717 (part), enrolled in the Corporate Taxpayers Record File (CGC - MF) under no. 00.626.882/0001-03, hereinafter referred to as ESTRELA, and both collectively hereinafter referred to as COMPANY,


all of them together hereinafter referred to as PARTIES, and individually as PARTY, herein represented by their officers


WHEREAS


I. CVRD and DOCEGEO own mineral rights in relation to areas located in
Para, the geological model of which is favorable to the occurrence of
gold.


II. CVRD has prepared a Program of Associations with private companies to
carry out, at their own risk, geological exploration followed by joint
exploitation of the gold reserves contingently found.


NOW, THEREFORE, the PARTIES decide to enter into this Agreement for carrying out mineral exploration and promise of association for the economic exploitation of ore deposits, hereinafter referred to as AGREEMENT, which shall be governed by the following clauses and conditions:


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CHAPTER I


DEFINITIONS


1. Whenever used in this AGREEMENT, the terms in bold listed below shall have
the following meanings:


1.1 MINERAL RIGHTS, means the ore mining rights represented by
Alvara (Exploration Permit) no. 7.731 (DNPM Proceedings no.
810.354/76), by Alvara no. 827 (DNPM Proceedings no.802.913/78), and
by Alvara no. 4.231 (DNPM Proceedings no. 850.026/89), true and
complete copies of which integrate Annex 1, and include all successor
mineral rights that may be granted, at any time, in the AREAS in full
or in part, and any information concerning them.


1.2 AREAS means the areas covered by the MINERAL RIGHTS, described
in detail in the copies of the Alvaras that constitute Annex 1, which
initially comprise joint areas representing a total of approximately
twenty five thousand (25,000) hectares.


1.3 INITIAL WORK PROGRAM means the work plan submitted by SOUTHERN
in its bid that is an integral part of this document as Annex 2.


1.4 COMPLEMENTARY WORK PROGRAM and COMPLEMENTARY WORK PROGRAMS
mean respectively one or all the work plans submitted by the COMPANY
after the INITIAL WORK PROGRAM for each one (1) year stage of
complementary exploration work.


1.5 COSTS OF THE AREAS means all costs or expenditures made by the
COMPANY in connection with agreements with surface owners or occupants
of the AREAS, or with any other agreements for obtaining or ensuring
access to the AREAS, entered into prior to the disbursement of the
MINIMUM INITIAL INVESTMENT, including all costs or expenditures
stipulated in such agreements in relation to the exploration and
exploitation to be paid after the disbursement of the MINIMUM INITIAL
INVESTMENT. The expenditures dealt with by items 12.2 and 27.2 of this
AGREEMENT shall not be included in the COSTS OF THE AREAS..


1.6 MINIMUM INITIAL INVESTMENT are all costs, expenses,
disbursements, debts and charges, whether direct or indirect, incurred
by the COMPANY, duly substantiated, and exclusively in relation to the
AREAS or the work contemplated by this AGREEMENT and carried out in
them, as specified in Annex 3, except the COSTS OF THE AREAS, up to a
total of five million two hundred thousand reals (R$ 5,200,000.00) as
adjusted by the IGPM index from the date of the execution of this
AGREEMENT to the date on which the total disbursement of the amount is
completed.


1.6.1 The MINIMUM INITIAL INVESTMENT of CVRD will be in the
same amount as the MINIMUM INITIAL INVESTMENT of the COMPANY,
and shall be deemed as having been made by CVRD on the date of
the execution of this AGREEMENT.


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1.7 MINIMUM DISBURSEMENT, called the minimum disbursement in the
COMPANY's bid, are all costs, expenses, disbursements, debts and
charges, whether direct or indirect, incurred by the COMPANY, duly
substantiated, and exclusively in relation to the work carried out in
the AREAS, or that concern them exclusively, as contemplated by this
AGREEMENT as specified in Annex 3, except the COSTS OF THE AREAS, up
to the total of three million seven hundred and seven thousand reals
(R$ 3,707,000.00) as adjusted by the IGPM index from the date of the
execution of this AGREEMENT to the date on which the total
disbursement of the amount is completed.


1.8 DEPOSIT means the aggregate of the measured and/or indicated
mineral resources (as such terms are generally employed in the
international industrial jargon of gold mining) of gold and gold
coproducts or associated metals discovered in the AREAS, provided that
such resources are of approximately one (1) million troy ounces or
more.


1.9 FEASIBILITY STUDY means the study of the technical-economical
feasibility of the exploitation of the mineral deposits in the AREAS,
comprising a detailed description of the implementation, development,
mining, processing and marketing strategy for a mine located in the
AREAS, in the form and at the detail level normally required by a
financial institution that is familiar with mining, with the purpose
of financing the projects. The FEASIBILITY STUDY is to take into
consideration the information obtained during the exploration work
carried out previously confirming the existence of the reserves
through detailed drilling, hydrogeologic and geotechnical work,
environmental studies, and the collection of one or more bulk samples
of the ore for metallurgical tests that may require the construction
of one or more shafts, construction of an incline, or work associated
with trial mining. The FEASIBILITY STUDY is to contain estimates both
of capital and operational costs, and is to analyze how to proceed
with the mining operations in order to extract economically and
commercially the target mineral (minerals), identify the ideal
structure for the mining project, and include references to the
relevant marketing and financial aspects.


1.10 VALUE OF THE MINERAL RIGHTS or NET PRESENT VALUE of NPV means
the value, on the date of the evaluation, of the proven and probable
ore reserves defined in the FEASIBILITY STUDY of the AREAS, after
deducting the taxes and statutory royalty payments. Such value shall
be stated in U.S. dollars and shall be calculated with a cost of
capital (internal discount rate) of eight point seven percent (8.7%)
per year, based on the immediate development of a mine in the AREAS,
based on the basic assumptions used in the FEASIBILITY STUDY, with one
hundred percent (100%) of equity financing, assuming free salability
of the gold in the international markets, and the U.S. dollar as
constant. Any supplementary resources that may be reasonably inferred,
even if they that are not categorized as proven or probable reserves
in the FEASIBILITY STUDY, shall be accounted as increments in the NET
PRESENT VALUE analysis, being processed in the same facilities
included in the capital and operational cost model used in the initial
calculations of the NET PRESENT VALUE. Alternative methods, such as
rate of return analysis, shall not be employed in the calculation of
the NET PRESENT VALUE, but only the net present value method as
described in this agreement.


1.11 TOTAL EXPENDITURES means the total expenditures made jointly
by the PARTIES during the WORK PROGRAMS and the preparation of the
FEASIBILITY STUDY, after the disbursement by the COMPANY of the
MINIMUM INITIAL INVESTMENT, except the COSTS OF THE AREAS and the
MINIMUM INITIAL


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INVESTMENT. Costs, expenses, disbursements, debts and charges, whether
direct or indirect, made by the COMPANY, related to or incidental upon
any work done in the AREAS or concerning exclusively the AREAS or the
products derived therefrom, according to Annex 3, that are not COSTS
OF THE AREAS, shall be included in the calculation of the TOTAL
EXPENDITURES.


1.12 WORK PROGRAM means the INITIAL WORK PROGRAM or any
COMPLEMENTARY WORK PROGRAM that may be carried out, if applicable.


1.13 ASSOCIATION means a corporation or any other type of
association between the COMPANY and CVRD or their respective
affiliates that will provide to the PARTIES the most advantageous ways
to implement a mine and exploit the MINERAL RIGHTS according to
Brazilian laws, administrative, tax and business factors, subject to
the provisions of Chapter IX and the other ones of this AGREEMENT. In
the event any of the PARTIES retains a ROYALTY instead of its INTEREST
PERCENTAGE in the ASSOCIATION, pursuant to the terms established
herein, the term ASSOCIATION shall refer to the operating company that
is implementing and exploiting a mine to the benefit of the other
PARTY.


1.13.1 The PARTIES shall have assured to them the necessary
flexibility to adopt the procedures aiming to the formation of
the ASSOCIATION in the most advantageous way for them in
relation to the limitations of Brazilian legislation and their
administrative conveniences, and subject to any requests CVRD
may make to the COMPANY as for such way, in order to obtain
the AUTHORIZATIONS.


1.14 ASSOCIATION AGREEMENT means an association agreement or any
other type of agreement that regulates in detail the terms and the
conditions under which the ASSOCIATION will operate and will be
managed. The ASSOCIATION AGREEMENT shall contain all the terms and
conditions specifically set forth in this AGREEMENT for inclusion in
the ASSOCIATION AGREEMENT, as well as the terms of Annex 4 that are
appropriate to the type of ASSOCIATION, plus the additional terms over
which the PARTIES may reach an agreement.


1.15 ROYALTY means the amount equivalent to a percentage on the
gold production ascertained after the refining, upon the mining and
beneficiating of the demonstrated reserves contained in the MINERAL
RIGHTS.


1.16 OPTION has the meaning attributed in clause 6 hereof.


1.17 PARTICIPATING INTEREST means


(i) prior to the formation of the ASSOCIATION, the percentage
of contribution of each one of the PARTIES to the aggregate
amount of the TOTAL EXPENDITURES plus the MINIMUM INITIAL
INVESTMENT of each PARTY; and


(ii) after the formation of the ASSOCIATION, and when it is
mentioned in this AGREEMENT, the percentage equivalent to the
interest of one PARTY in the stock capital of the ASSOCIATION.


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1.18 AUTHORIZATIONS means all governmental, legislative,
ministerial or other kind of approvals, consents or collateral
signatures of any type that are required by the legislation in force
or by the bylaw of CVRD or of DOCEGEO for admission to and for the
formation of the ASSOCIATION with the COMPANY and for the performance
of the ASSOCIATION AGREEMENT.


1.19 PVI or PRESENT VALUE OF THE CAPITAL INVESTMENT means the
present value of the capital investment forecasted in the FEASIBILITY
STUDY to implement the business.


1.20 CONTROL means the holding of the majority of the voting
capital of a corporation and the permanent power to elect the majority
of its board.


1.21 IGPM means the General Index of Prices in the Market ("Indice
Geral de Pregos do Mercado)" of Getulio Vargas Foundation.


CHAPTER II


PURPOSE


2. The following constitute the purpose of this agreement:


2.1 The carrying out by the COMPANY, on its own account and risk,
of mineral exploration work, specifically; for gold, in the AREAS.


2.2 The promise hereby made by CVRD to directly or indirectly
associate with the COMPANY for the economic exploitation of the gold
deposits which may be found in the AREAS.


2.3 The grant of an OPTION to the COMPANY, subject to the
provisions of item 1.17 and of clause 22, to obtain an PARTICIPATING
INTEREST in the ASSOCIATION, that is to hold the MINERAL RIGHTS and
carry out the exploitation of gold and associated minerals discovered
in the AREAS, provided that the FEASIBILITY STUDY results positive,
and subject to the AUTHORIZATIONS and other provisions of this
AGREEMENT.


2.4 To establish the terms and clauses that shall govern the
COMPANY, CVRD and DOCEGEO during the mineral exploration in the AREAS,
the preparation of the FEASIBILITY STUDY and, if applicable, the
formation of the ASSOCIATION.


CHAPTER III


TITLE ON THE MINERAL RIGHTS


3. CVRD represents it is the beneficial titleholder of the mineral rights represented by Alvara (Exploration Permit) no. 7.731 (DNPM Proceedings no. 810.354/76), by Alvara no. 827 (DNPM Proceedings no.802.913/78), which are in perfect order, duly registered and recorded, free and clear of any encumbrances, and validly authorize the exploration for gold in the AREAS in accordance with the applicable laws.


5 7 4. DOCEGEO represents it is the beneficial titleholder of the mineral rights represented by Alvara no. 4.231 (DNPM Proceedings no. 850.026/89), which is in perfect order, duly registered and recorded, free and clear of any encumbrances, and validly authorizes the exploration for gold in the AREAS in accordance with the applicable laws.


4.1 DOCEGEO and CVRD represent that the ore exploration right
dealt with by this clause is free and clear of any encumbrances except
for the Waiver signed on 06/24/91 with the National Department of
Mineral Exploration (DNPM) which is an integral part of Annex I of
this AGREEMENT, and undertake to use their best efforts to render it
ineffective.


5. CVRD and DOCEGEO undertake to maintain the MINERAL RIGHTS under their title, in perfect order, and free and clear of any encumbrances and charges, for as long as this AGREEMENT is in effect, fulfilling all necessary legal requirements to that effect.


5.1 In the event CVRD or DOCEGEO are no longer the titleholders of
the MINERAL RIGHTS, while this AGREEMENT is still effective, due to
any action or omission of CVRD or DOCEGEO, or due to the event dealt
with by item 4.1 of this AGREEMENT, this AGREEMENT shall be considered
automatically terminated, and CVRD shall pay the COMPANY as liquidated
damages:


(i) within thirty (30) days as of the loss of the title
of said MINERAL RIGHTS, an amount equal to one hundred and
fifty percent (150%) of all expenditures made by it until
then, except the COSTS OF THE AREAS, in case the loss of the
MINERAL RIGHTS occurs before the existence of a DEPOSIT is
evidenced, whereby the COMPANY hereby waives any other
remedies and benefits it might have under the legislation in
force;


(ii) the PARTICIPATING INTEREST of the COMPANY multiplied
by the VALUE OF THE MINERAL RIGHTS, in five (05) annual
installments adjusted by the IGPM index, in the event the loss
of the MINERAL RIGHTS occurs after the existence of a DEPOSIT
is evidenced but before the completion of a FEASIBILITY STUDY
considered positive, whereby the COMPANY hereby waives any
other remedies and benefits it might have under the
legislation in force;


(iii) the PARTICIPATING INTEREST of the COMPANY multiplied
by the VALUE OF THE MINERAL RIGHTS, in five (05) annual
installments adjusted by the IGPM index, in the event the loss
of the MINERAL RIGHTS occurs after the completion of a
FEASIBILITY STUDY considered positive, whereby the COMPANY
hereby waives any other remedies and benefits it might have
under the legislation in force;


5.2 In the event the loss of the MINERAL RIGHTS occurs after the
DEPOSIT is evidenced, but before the completion of a FEASIBILITY
STUDY, the PARTIES agree to complete the FEASIBILITY STUDY in the way
regulated in this AGREEMENT, so that it is possible to calculate the
indemnification dealt with by item 5.1 (ii), above.


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CHAPTER IV


OPTION TO ASSOCIATE


6. CVRD and DOCEGEO hereby grant to the COMPANY (i) the exclusive and irrevocable right to carry out work in the AREAS, pursuant to the MINERAL RIGHTS, and (ii) the OPTION to acquire a PARTICIPATING INTEREST in the ASSOCIATION to be formed, subject to the provisions of item 1.17 and of clause 22, conditioned on the cumulative occurrence of the three events listed below:


6.1 A positive FEASIBILITY STUDY is obtained; AND


6.2 CVRD obtains the AUTHORIZATIONS; AND


6.3 The COMPANY has made the MINIMUM INITIAL INVESTMENT.


7. The OPTION shall be considered automatically exercised by the COMPANY as soon as the events listed in clause 6, above, occur.


7.1 The COMPANY may fail to exercise the OPTION and terminate this
AGREEMENT, without obligations or liabilities in relation to the
MINERAL RIGHTS or to the AREAS, by written notice to CVRD, at any
time, provided that the COMPANY has made the MINIMUM DISBURSEMENT
already. Otherwise the COMPANY shall pay CVRD the difference between
the MINIMUM DISBURSEMENT and the actual amount of expenditures that
have been made already to the date of the notice of termination.


CHAPTER V


EXPLORATION WORK


8. The COMPANY undertakes to carry out all geological exploration works in accordance with the mining/environmental legislations, with the WORK PROGRAMS and under the following conditions:


8.1 The COMPANY shall be responsible, at its sole discretion, for
the mineral exploration work in the AREAS, comprising all managerial,
technical and administrative activities, within the scope of the WORK
PROGRAM.


8.2 The COMPANY shall have full power and authority over the AREAS
to carry out the mineral exploration work substantially within the
periods of time scheduled in the WORK PROGRAM, except where due to a
force majeure. However, CVRD and DOCEGEO shall use their best efforts
to assist it in order to assure the development of the work in the
AREAS according to the WORK PROGRAM.


8.3 All matters related to the exploration work will be dealt by
the COMPANY with DOCEGEO, which only for this purpose will act on
behalf of CVRD. After the execution of this AGREEMENT, DOCEGEO shall
appoint its permanent technical representatives, whose


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responsibilities shall be to act in favor of DOCEGEO, and shall
provide the COMPANY with their names and other data required for
communication with DOCEGEO under this AGREEMENT.


8.4 The COMPANY undertakes to submit for DOCEGEO's approval, which
is not to be unreasonably withheld, every three (3) months, a report
with the partial results of the exploration and a statement of the
expenses made in the period of time, also informing the contingent
discovery of the occurrence of any other mineral substance. DOCEGEO
may ask the COMPANY, through notice in writing, within fifteen (15)
days after receiving the report, additional details or clarifications
regarding any information contained in any report, and the COMPANY
shall immediately render the respective clarifications. In the event
DOCEGEO does not reply in a term of 15 days counted from the receipt
of the report, the latter shall be deemed approved.


8.5 This AGREEMENT and the MINERAL RIGHTS shall encompass gold and
any other minerals that are coproducts of gold, or that are otherwise
closely related to gold, considering as such those that, for an
efficient economic exploitation, should be mined and processed jointly
with gold. The ownership, exploration and contingent commercial
exploitation of any other substances will be incumbent upon CVRD or
DOCEGEO exclusively, whereby no indemnification or reimbursement for
expenditures made is due to the other PARTIES.


8.5.1 The COMPANY and the ASSOCIATION may make use of sand,
gravel, timber and other minerals and natural resources
existing in the AREAS, on a non-commercial basis, in order to
comply with the provisions of this AGREEMENT and the
ASSOCIATION AGREEMENT, subject to the legislation in force.


8.6 CVRD and DOCEGEO undertake to offer to the COMPANY the right
of first refusal to associate with CVRD for the exploitation of any
commercial minerals not encompassed in this AGREEMENT and in the
MINERAL RIGHTS, according to item 8.5, above, whenever such right may
be offered by CVRD to third parties, and under the same terms and
conditions.


8.7 CVRD and DOCEGEO may, whenever they wish, and at their
expense, on three (3) days' notice to the COMPANY, and through the
prior accrediting of persons, carry out the surveillance of the
exploration work and of this AGREEMENT, whereby the COMPANY will be
obligated to facilitate the surveillance action, permitting free
access to all locations, documents, data and elements related to its
performance.


9. The COMPANY, except in case of force majeure, undertakes to start the exploration work in a term of ninety (90) days counted from the execution of this AGREEMENT, whereby all time references included in the INITIAL WORK PROGRAM will be extended for an equal period of time.


10. The term required for the COMPANY to carry out the INITIAL WORK PROGRAM is thirty (30) months. The COMPANY may be authorized by DOCEGEO to make changes in the INITIAL WORK PROGRAM or any COMPLEMENTARY WORK PROGRAM, based on the results of the program performed and other circumstances that may arise during the performance of such WORK PROGRAM. DOCEGEO may not unreasonably withhold or delay its authorization.


11. In the hypothesis that at the and of the term required for carrying out the INITIAL WORK PROGRAM the existence of a DEPOSIT has not been confirmed yet, but there being a reasonable
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