Significant milestones have been achieved in FGR (FGR) quest to turnaround the fortunes of the Bogoso Prestea Mine (BPM). This was revealed last weekend by the Chief Operating Officer of FGR, Mr. Adam Clode, during a presentation to editors and reporters of local and national media organizations at the company’s mine site in Bogoso.
BPM had been a loss-making entity in the last five years, under the ownership and operational control of the previous owners, with an anticipated eventual shut-down and the associated negative impacts on the local communities, as well as the national economy and security. In October 2020, however, the mine was purchased by FGR, which is owned by Blue International (Blue).
Headquartered in the UK, and with other business interests in sub-Saharan Africa, Blue focuses on investing in and developing long-term assets in sub Saharan Africa, by injecting the needed capital and introducing the required operational efficiencies to generate multi-generational wealth for the benefit of local communities, governments, and shareholders. With this vision, BPM was acquired, amid uncertainty and anxiety from some stakeholders about the future of the mine.
Where others saw BPM as a failing mining operation destined for total collapse or, at best, care and maintenance, Blue and FGR saw a mine with tremendous potential and a technically capable workforce. The transformation of the mine was, however, not going to be a walk in the park.
The operation was debt-laden and had been starved of investment, particularly for exploration, for years. With the acquisition, FGR also inherited a mine with an unsustainably high operational cost, and less-than-reported underground resource.
From 2016 to 2020, under the previous ownership, the mine lost US$80million. The all-in-sustainable cost (AISC), at the time FGR purchased BPM, was almost twice the gold price, meaning that each ounce of gold was produced at a loss, further worsening the mine’s financial health.
Delivering the turnaround
When BPM was purchased, there was the urgent need for a critical look at the entire operation, to fully understand the underground ore body in particular, as well as the operational culture, to be able to deploy the right intervention and set the mine on the path of recovery.
A review of the underground resource was done, and it was immediately determined that a business case could not be made to justify the continued operations of large sections of the underground. These unproductive sections were, thus, shut down to reduce the cash burn, with the intention of carrying out a more detailed assessment of the underground resource potential and validate profitability. An underground decline project is currently being assessed which will potentially extend the underground life of mine.
In the meantime, however, FGRBPL has since embarked on a surface mining campaign and successfully managed to increase its active mining from 10,000 tons per month to 60,000 tons per month in the course of 2021. The plan is to increase this to 100,000 tons per month in the first half of 2022. This planned expansion of open pit operations is expected to create additional employment opportunities, especially for local community residents.
The strategic decisions that have been made so far by Blue and FGR have started to yield results and reflect positively in the financial bottom line, as well as in safety. AISC, which stood at US$3,230 per oz at the time of purchase of the mine, has reduced drastically to US$1,365 per oz. For the first time in five (5) years, BPM is now cash flow positive. The safety statistics also tell a very positive story, from a Lost Time Injury Frequency Rate (LTIFR) of 13.01 in 2019, to 2.08 in 2021. These positive changes have been possible on the back of substantial investments.
Blue, through FGRBPL, has invested over US$23million in exploration, equipment, and in other aspects of the business within the past 15 months, with an additional planned capital injection of US$25million in 2022. Part of this investment will go into a refractory metallurgical study which many believe will define the future of the entire Bogoso Prestea operations. An end-to-end refractory project will cost over US$300million, and Blue is prepared to make this investment if the study confirms the economic viability of the refractory resource.
FGRBPL recognizes the importance of maintaining its social license to operate, through constructive and transparent engagement with its host communities, as well as being a catalyst for economic prosperity through local employment, social investment, etc.
During the recent explosion that decimated the Appiatse community, BPM was one of the first responders on the scene, deploying the mine’s rescue teams, fire trucks, providing evacuation support, and playing an active role in the creation of an alternate access route for commuters whose movements were immediately curtailed by the presence of a crater in the highway, caused by the explosion.
FGRBPL is pursuing an ambitious plan, underpinned by its values of determination, collaboration, and innovation, as well as its belief in creating multi-generational wealth for stakeholders through responsible resource extraction.