A ROW is brewing over the sale of the Bogoso-Prestea mine to start-up firm Future Global Resources (FGR) which has not paid a $15m installment on the Ghana asset.
Golden Star Resources sold Bogoso-Prestea mine to FGR so it could concentrate on the development of its Wassa mine, also in Ghana. Wassa is forecast to produce between 145,000 and 155,000 ounces of gold this year, about 13% less than guided earlier this year.
An agreement to sell Bogoso-Prestea was twice amended by Golden Star, but in essence, it remains as originally agreed in July 2020 which was for FGR to pay $5m in cash and pay a further $10m by the end of this month.
A further $15m is due to July 31, 2023, whilst FGR also takes on some $25m in negative working capital as per Bogoso-Prestea’s second quarter accounts last year. The scheduling of the consideration was to allow FGR time to get its hands around the asset.
Golden Star is demanding FGR’s major shareholder Blue International Holdings Limited pay the $15m due (the $5m upfront cash plus the $10m due by end-month).
It said FGR claimed it was entitled to set off its obligation to make the payment under the agreement owing to “… various alleged breaches”. Golden Star said it believed the claim to be “completely without merit”.
“In the event payment is not received from BIH, Golden Star and Caystar (Golden Star’s wholly-owned subsidiary) are evaluating all available avenues of recourse in order to seek full recovery of amounts owed by FGR,” the company said.
The dispute is especially unwelcome for Golden Star as it was seeking to cut its losses in respect of Bogoso-Prestea. It had written down the mine for $56.8m in February 2020 following a restructuring: the impairment resulted in a net loss of $78m for Golden Star’s 2019 financial year, deepening the $24.1m loss the firm recorded in the previous year.
Golden Star has since budgeted $45m to $50m for the development of Wassa saying in March that the mine’s Southern Extension zone has an inferred mineral resource yielding gold production of 3.5 million oz over the life of the mine. This represents a 75% increase in the current production rate.
It forecast average annual gold production of 294,000 oz for 11 years from Wassa.