Golden Star Resources (GSR) Limited, the gold mining company that owns and operates the Wassa and Prestea underground mines, has said the sale of its Bogoso-Prestea Gold Mine to Future Global Resources (FGR) for US$95million presents the best opportunity to focus all of the company’s attention on maximizing the potential of the Wassa mine.
The company announced the sale of its 90 percent stake in Bogoso-Prestea Gold Mine to Future Global Resources, a subsidiary of Blue International Holdings Limited, a UK based private investment holding company, yesterday.
The sale, according to a statement issued by Golden Star, stipulates that an initial purchase price of US$55 million shall be paid with a further contingent component of up to US$40 million staged payments to ensure FGR focuses investment capacity on the asset itself while providing Golden Star with exposure to its long-term growth potential. Following the satisfaction of the closing conditions in the agreement, including obtaining the required government approvals, the transaction is expected to complete by no later than September 30, 2020.
In a virtual press conference after the announcement, Andrew Wray, President and Chief Executive Officer of Golden Star Resources, noted that the sale of the mine offers Golden Star the opportunity to channel all of its energies, skills, resources and attention on maximizing the full potential of the Wassa mines.
“The sale allows Golden Star to focus our attention on Wassa because it strengthens our balance sheet by providing a cash inflow of US$30million by 2023. Wassa has growth potential, a strong motivated team and churning out fantastic results. We can now accelerate the growth Wassa deserves with its accompanying investments.
Wassa, over the last two to three years, has shown tremendous growth with very high quality operations which has subsidized the operations in Bogoso-Prestea and with the sale of Bogoso-Prestea, we would now be accelerating the development of Wassa. We see ourselves as an African mining business and there are clearly lots of prospects in Ghana and that is something we would look at,” he said.
Why Future Global Resources (FGR)
Mr. Wray, asked why Golden Star chose FGR as institution to sell to and why sell now, noted that the deciding factor is the quality of the partner coming in and record gold prices makes it a good decision to sell now.
“The critical element in mining is the people involved in it. The shareholders have a track record of developing assets and businesses in Africa and are very keen to continue and committed to do that. They have a real focus on sustainability and contributing to the countries they are in. They have a range of financial backers and agreements with some of the biggest development banks and those banks are careful with who they do business with. We believe they have the right people, approach and focus.
The investor coming in wants to grow the business and not to cut it. We are at a stage of expanding the underground mine and FGR could expand and grow the assets. To the very best of my knowledge, there is no plan to cut jobs. All of our discussion have been around how to grow the business. Overtime, they would require more people and not less,” he added.
Decision shows quality of Ghana as investment destination
Mr. Wray added that in times such as these with COVID-19 still prevalent, this deal going through speaks volumes about the qualities of the Ghanaian economy as an ideal investment destination.
“This is a great transaction for Bogoso-Prestea, the workers, and the Ghanaian economy. With COVID-19, this is fantastic because companies are laying off workers, putting a hold on investment. It is a very positive development and Ghana, as an investment destination, should be proud of it.
It means Ghana respects law and order, has a good and strong industry with capable people. For the team at the site, this means that they can get on with delivering on their potential and do not want to worry about instability.”
Glenn Baldwin, Chief Executive Officer of Future Global Resources, added that FGR is delighted to acquire 90% of the Bogoso-Prestea Gold Mine as its first production asset.
“FGR is looking forward to engaging with the workforce, communities, and Government of Ghana, developing constructive and sustainable partnerships. We have confidence in the potential for additional discoveries and extensions to the underground mineral resources, through which we hope to generate real value by investing in the workforce and our relationships with local stakeholders.”