Employees and community members of Golden Star Resources’ (GSR) recently sold Bogoso Prestea Mine are petitioning the government to intervene in the mine’s sale due to inherent risks the deal poses to Ghanaian employees and the micro-economy of Prestea Huni-Valley Municipality.
The employees are saying the deal if allowed to go through in its current form, will see the relinquishing of cost to revamp the Bogoso Prestea Mine and environmental rehabilitation liabilities of about US$53million ultimately to government.
This is because the new owner, Future Global Resources (FGR), is a non-listed private 11-month old mining company that has not invested a single dollar in the mine, and could liquidate with any little business stress without losing anything. That ability to liquidate, the employees believe, reverts all cost liabilities to government and at the same time denies employees their legitimately accrued contractual severance benefits.
Golden Star Resources, a mining company operating two gold mines in Ghana, sold one of its subsidiaries in a deal that the employees are currently describing as “putting profits over people” by trading both the employees and other assets to a buyer with no regard for the mine’s future survival.
Golden Star sold the Bogoso Prestea Mine and its labour force to Future Global Resources (FGR), denying 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).
In this petition submitted to the government following the initial sale announcement on July 27, 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, Goldfields and Barrick – to run a mine with the largest concession in Ghana.
Some critical issues arise from this sale: like the risk of losing the mine in the hands of an inexperienced and non-listed mining company – thus reverting US$53million rehabilitation liability to government, an attempt by Golden Star Resources to violate employment agreements with employees and set a precedent for selling or trading Ghanaian workforces between foreign investors.
Employees and Community Request to Government
Employees and the entire communities of Bogoso Prestea and its catchment area call on the government of Ghana and 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 the 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 also would not 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 US$53million) to the Government of Ghana.
The mining 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 packages and were offered new appointment letters to sign as an indication of their consent to new employment with the buyer (GSR).
In 2002, the Bogoso Mine made good profit and purchased the Satellite Gold Mine at Wassa Akyempim, which was renamed as Wexford and later named 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 areas of finance and labour.
During the third quarter of 2018, Lamancha Investment Group bought majority shares (30%) and became the major shareholder of GSR at a time when Bgogoso Prestea Mine was struggling to get a positive cash flow while its sister Wassa Mine was making a good profit and supporting the Bogoso Prestea operations.
On the record, Bogoso Prestea Mine had supported Wassa Mine between 2014-2016 when it was in negative cash flow until 2018 when the Wassa production experienced positive cash flow. Lamancha’s business model from its website publications emphasises short-term organic growth for acquired mining firms, and it was poised to achieve that.
In 2019, Lamancha appointed the then CEO of Lamancha as 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 was on a negative cash flow and hence impacting 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 preconceived ultimate pre-acquisition 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/or credible website. This is the firm the largest mining concession in Ghana was sold to by Golden Star Resources, to the detriment of the workforce and mine community.
Employee and Community Concern about 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 which had been working assiduously to ensure the turnaround of Bogoso Prestea Mine. The sale agreement indicated employees had been transferred to the Mine’s buyer 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 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 like of Newmont, Goldfields, Barrick and AngloGold Ashanti could have given the community an assurance of mine revamp and a viable mine community.
There is a fear of 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 and left the mining 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 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. The CEO of GSR, in the third-quarter published business report, 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 US$24m of negative working capital and a US$53m rehabilitation provision from the company’s balance sheet”.
The sale is also structured such that the buyer (FGR) pays 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:
- US$5million of cash is payable on the earliest (i) date at which FGR puts in place a new reclamation bond with the Environmental Protection Agency of Ghana, or (ii) March 30, 2021;
- US$10million of cash is payable on July 31, 2021;
- Approximately US$4million of cash for the net working capital adjusted balancing payment is payable on July 31, 2021; and
- US$15million 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 precedent to be emulated by many foreign investors if Ghana as a country and its leadership do not react to rectify such colonialist labour-trading and exploitative practices of investors – by streamlining investments to ensure win-win scenarios between Ghana and foreign investors.