Labour agitation hits new owners of Bogoso-Prestea gold mines…workers demand severance payment
Adnan Adams Mohammed
While some 200 former workers of the Bogoso- Prestea gold mines, a subsidiary of Golden Star Resources (GSR) Limited are in court, the rest of the workers have petitioned the new owners, Future Gold Resources Ltd (FGR), demanding a discussion on their severance payment as soon as possible.
The petition was presented to the senior management of FGR,
las week, after a mini-demonstration at work site. The petition signed by the
leader of the workers union, MacDonald Kitson Hytey captured that; “We as
workers are not part of the capital assets on the balance sheet transferred to
you as a buyer in the recent acquisition of the mine. For us to be a part of
your acquisition, the place would have to be Bristol or Liverpool, England and
the time would have to be in the 18th century. This is sovereign Ghana in the
21st century and that shall not be the case”.
Our readers can remember that, fortnight ago, this paper
(Economy Times) published a story on the front-page with a headline
“Bogoso-Prestea Gold Mines sold to FGR in a ‘bizarre’ transaction arrangement”,
where Golden Star Resources sold all it’s 90 percent interest in the
Bogoso-Prestea mines to FGR effective October 1, 2020 at a deferred cost of $95
million.
The intriguing and bizarre news of the transaction is that, Future Global Resources Limited (FGR), which is an unexperienced newly incorporated company in this year and without listing experience on any stock exchange, is not paying the initial US$5.0 million cash consideration upfront, this means it is a deferred payment sales, and this has not sit well with some tax and extractive industry experts. Also, the remaining US$90 million is to be paid over a 3-year period during their operation. Further information gathered reveals that, mining giants with remarkable track record in the industry such as Newmont and Goldfields Ghana showed interest in buying the said mines a couple of years ago but were denied. However, government holds 10% shares in the company, these experts say Ghana could lose revenue in taxes and dividends.
“The sale strengthens Golden Star's balance sheet and allows the Company to accelerate the growth and development of the large resource base at the Wassa mine, and increase exploration activities in the wider Wassa-HBB project area”, Andrew Wray, President and Chief Executive Officer of Golden Star, who signed the press release noted which was released on the very day the transaction took effect, adding that, “We now look forward to completing a Preliminary Economic Assessment on the development options for the ore body by the end of the year. In doing so we can subsequently provide the market with greater clarity around the potential path and timing for future growth at the asset.”
“Bogoso-Prestea will also benefit from having an owner solely focused on delivering the turnaround of the underground operation and assessing the significant potential of the sulfide resources. As a result, we see this transaction as positive for both FGR and Golden Star, our respective employees, Ghana, the host communities and all of our other stakeholders."
The petition
But, the over 700 former workers in their petition stated;
“We are requesting that you give us an update following your promise, a week
ago, to engage with GSR on the payment of our Severance as a matter of urgency.
“We have added to this petition a sample of what was done by
way of precedence here in Bogoso in 1999 prior to the takeover of GSR from
Bogoso Gold Limited. This is the expectation we have of GSR prior to your take
over as FGR.
“We are demanding Severance letters from GSR and letters of
appointment offering a new employment by
a new employer with a dotted line for us to sign acceptance or otherwise.
“We as workers are not part of the capital assets on the
balance sheet transferred to you as a buyer in the recent acquisition of the
mine. For us to be a part of your acquisition, the place would have to be
Bristol or Liverpool, England and the time would have to be in the 18th
century. This is sovereign Ghana in the 21st century and that shall not be the
case.
“As a result of your public commitment to our long-term
future at Bogoso Prestea, we believe that you will accede to our demand so we
can continue to this common future peacefully.”
Details of the transaction arrangement:
The subsequent staged payments, totaling US$25 million, and
contingent payments of US$20 to US$40 million ensure that FGR is able to focus
its investment capacity on the business whilst providing Golden Star with
exposure to Bogoso-Prestea's long-term growth potential
Following further commercial discussions, Golden Star and
FGR agreed to amend the commercial terms of the sale of Bogoso-Prestea. The
consideration remains unchanged with FGR taking on all the assets and
liabilities of the Bogoso-Prestea subsidiaries at closing. The cash
consideration is now all 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, or (ii) March 30, 2021;
$10 million of cash is payable on July 31, 2021; and
$15 million of cash is payable on July 31, 2023.
In addition to the consideration payable at closing and the
deferred payments, a contingent payment of up to $40 million conditional upon
the occurrence of the milestones described hereinafter in respect of the
development of the Bogoso Sulfide Project (the "Contingent Payment")
may become payable by FGR to Golden Star.
The trigger point for the Contingent Payment is either (i) FGR's formal
decision to proceed ("Decision to Proceed") with the Bogoso Sulfide
Project, or (ii) the extraction of an aggregate of 5% of the sulfide resources
as stated at the end of 2019, being 1.76 million ounces of measured and
indicated resources and 0.07 million ounces of inferred resource. The quantum
of the Contingent Payment is determined by reference to the average spot gold
price for the 90 day period preceding the date of the Decision to Proceed:
$20 million, if the average spot gold price is less than or
equal to $1,400/oz;
$30 million, if the average spot gold price is greater than
$1,400/oz but less than or equal to $1,700/oz; or
$40 million, if the average spot gold price is greater than
$1,700/oz
The Contingent Payment is payable in two tranches:
50% at the time of (i) the Decision to Proceed, or (ii)
declaration that 5% of the sulfide mineral resources have been extracted; and
50% at the time of the first anniversary of (i) achieving
commercial production following the Decision to Proceed, or (ii) the first
anniversary of the declaration that 5% of the sulfide mineral resources have
been extracted.
Restructuring of RGLD Gold AG streaming agreement:
Also, Caystar Finance Co. (a wholly-owned subsidiary of
Golden Star) and RGLD Gold AG (an affiliate of Royal Gold, Inc.) have
restructured the streaming agreement covering the Wassa mine and
Bogoso-Prestea. The stream has been restructured
to separate Bogoso-Prestea from the current arrangement. Wassa now retains the
remaining Tier One streaming obligation, which relates to the delivery of gold
at a rate of 10.5% of production for a 20% delivery payment. As at June 30,
2020, there were c.129.5koz Tier One ounces remaining to deliver. Following the
delivery of the remaining Tier One obligation, the streaming obligation at
Wassa will transition into the Tier Two structure, which delivers 5.5% of gold
production for a 30% delivery payment.
The Company's 2020 production and cost guidance is expected
to be updated for the sale of Bogoso-Prestea as part of the reporting of the Q3
2020 results on October 28, 2020.
0 comments: