Golden Star Resources (GSR) is relinquishing the cost to revamp the Bogoso Prestea mine and the environmental rehabilitation liabilities of about $53M to a non-listed private 11-month old mining company which has not invested a single dollar in the mine and could liquidate at any little business stress without losing anything thereby reverting all cost liabilities to Government and at the same time denying employees of their legitimately accrued contractual severance benefits.
Golden Star Resources, a mining company operating two gold mines in Ghana has sold one of its subsidiaries in a deal that can be described as putting profits over people by trading both the employees and other assets with a buyer and with no regard for the future survival of the mine.
Golden Star sold the Bogoso Prestea Mine and its labour to an inexperienced 11-month old Future Global Resources (FGR) denying the permanent employees of the company their legitimate severance entitlement and the opportunity for legal engagement with the buyer contrary to the employment contract agreement between permanent employees and the employer (GSR).
Employees in a correspondence have petitioned the Government of Ghana on the business decision of GSR, the precedence risk this sale presents to the Ghanaian employees and the risk to the micro economy of Prestea Huni-Valley Municipality.
In this petition submitted to the Government following the initial sale announcement on the 27th July 2020, employees highlighted, with grave concern, that the buyer does not have any credentials in the mining industry unlike the likes of Newmont, Anglogold Ashanti, Goldfield and Barrick to run a mine with the largest concession in Ghana.
Three critical issues arise from this sale – the risk of losing the mine in the hands of an inexperienced and non-listed mining company reverting $53million rehabilitation liability to government, an attempt by Golden Star Resources to violate employment agreements with employees and a precedence of selling or trading Ghanaian workforce between foreign investors.
Employees and Community Request to Government
Employees and the entire communities of Bogoso Prestea and its catchment call on the Government of Ghana and the lawmakers to act as a matter of urgency to save the mine and the communities as well as secure the entitlement of employees by doing proper post-sale due diligence of the sale and its content, and to ensure that GSR does the needful required by law.
It is obvious that Lamancha had no interest to turnaround the GSR Bogoso Prestea Mine right from the initial acquisition of shares in GSR and will not also wish to directly close the Bogoso Prestea mine as that would impact on their gains at the Wassa Mine and investment reputation, hence trading it to a private inexperienced non-listed firm at near zero cost.
Any liquidation of the mine while being owned by the private firm presents no risk to GSR’s business in Ghana and the private firm, having no investment in the Bogoso Prestea mine, also loses nothing by reverting the mine environmental and other liabilities (in excess of $53 million) to the Government of Ghana.
The mine communities could collapse at any future date if the appropriate Government interventions are not made.
About GSR and its Intent for the Sale
GSR acquired Bogoso Prestea Mine in 1999 when employees had been properly severed by the then Bogoso Gold Limited. All employees were issued with letters of disengagement with contractual severance agreement package and were offered new appointment letters to sign as indication of their consent of new employment with the buyer (GSR).
In 2002, the Bogoso Mine made good profit, purchased the Satellite Gold Mine at Wassa Akyempim which was renamed as Wexford and later named as Golden Star Wassa Limited. GSR then operated these two major mines (Wassa Mine and Bogoso Mine) in Ghana. The two mines operated concurrently with support to each other in the area of finance and labour.
During the third quarter of 2018, Lamancha investment group bought majority shares (30%) and became the major shareholder for GSR at a time when Bgogoso Prestea mine was struggling to get a positive cash flow while its sister Wassa Mine was making good profit and supporting the Bogoso Prestea Operations.
On record, Bogoso Prestea mine had supported the Wassa Mine between 2014-2016 when the mine was in negative cash flow until 2018 when the Wassa production experienced positive cash flow. Lamancha’s business model from their website publications emphasises on short term organic growth for their acquired mining firms and they were poised to achieved that.
In 2019, Lamancha appointed the then CEO of Lamancha as the CEO of GSR. On assuming office as the CEO of GSR, Mr. Andrew Wray, culled the old GSR executive team and replaced them with a new team predominantly from the Lamancha group. About 70% of all investment announcements made after the third quarter of 2018 by GSR was used to develop the Wassa mine.
Six months after assuming office, Mr. Andrew Wray, the CEO indicated that the Bogoso Prestea mine is on a negative cash flow and hence impacting on the entire GSR business cash flow, meanwhile the same CEO directed most capital investments to the Wassa Mine.
On 27th July 2020, the CEO announced the preacquisition preconceived ultimate plan of the sale of Bogoso Prestea Mine and to no other mining firm but a newly formed 8-month old mining company with no mining experience anywhere in the world.
This new mining firm Future Global Resources is a private firm, non-listed on any stock exchange and has no traceable and credible website. This is the firm the largest mining concession in Ghana was sold to by Golden Star Resources and at the detriment of the workforce and the mine community.
Employees and Community Concern about the Mine Continuity
Fact findings indicate there was absolute neglect of employees on the sale and the announcement came as a surprise to the entire workforce who had been working assiduously to ensure the turnaround of the Bogoso Prestea Mine.
The sale agreement indicated employees have been transferred to the buyer of the Mine without their consent which is tantamount to colonial slave trading of labour and also against the contract agreement these permanent employees have with the Bogoso Prestea mine.
The transfer denies employees of their free choice of employer which is enshrined in the Ghana Labour Act (Act 651) and against international human rights laws. Employees argue that, they are not part of the company’s transferable assets or balance sheet to be traded as equipment or plant as is the intent in this case.
The entire mining community is concerned about the ability, tenacity and resilience of a non-listed private firm with no prior mining experience to run the mine that has the largest concession in Ghana and operates both underground and surface operations. The likes of Newmont, Goldfields, Barrick and Anglogold Ashanti could have given the community an assurance of mine revamp and a viable mine community.
There is the fear by the employees and mining community that the private non-listed firm could bolt at any time under the slightest business stress similar to the previous history of Bontey Mine in the Ashanti Region in which scenario the mine management vamoosed leaving the mine community worse off.
Inherent Objectives of GSR
It is evident based on the duration of GSR’s investment in Bogoso Prestea Mine, the time of registration (UK registration) of the buyer (FGR) and sale transactions between GSR and FGR, that GSR’s focus is on Profits and not People as the acquisition was meant to profit from an already profit yielding Wassa Mine with a camouflage to revamp the Bogoso Prestea Mine.
The entire game plan was to get rid of the Bogoso Mine and make exploitative gains from the Wassa Mine. CEO of GSR in the third quarter business report published, revealed that the intent of the sale was to clean up the balance sheet and that the future survival of the Bogoso Prestea Mine is of no relevance to the GSR management team as indicated in the report: “The Bogoso-Prestea disposal removed $24m of negative working capital and a $53m rehabilitation provision from the Company’s balance sheet”.
The sale is also structured such that the buyer (FGR) pay zero dollar in acquiring the mine and that all payments are deferred and contingent on some milestone achievement as indicated in the announcement;
“The cash consideration payable by FGR for the asset is deferred and will be paid as follows:
- $5 million of cash is payable on the earlier of (i) the date at which FGR puts in place a new reclamation bond with the Environmental Protection Agency of Ghana, or (ii) March 30, 2021;
- $10 million of cash is payable on July 31, 2021;
- Approximately $4 million of cash for the net working capital adjusted balancing payment is payable on July 31, 2021; and
- $15 million of cash is payable on July 31, 2023.”
By inference, GSR in a cunning way is cheating Ghana as a country in the exploitation of her gold resource and robbing its citizens.
This business approach by GSR is non-ethical and has focused on taking advantage of loopholes in the Ghanaian legal system to make excessive gains while leaving the country with potential costly liabilities.
The dubious precedence of GSR’s business strategy of making quick gains from the nation’s resources while denying working citizens their legitimate rights of severance and choice of employer will be a landmark that will be emulated by many foreign investors if Ghana as a country and her leadership do not react to rectify such colonialist labour trading and exploitative practices by investors by streamlining investments to ensure win-win scenarios between Ghana and foreign investors.
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