Future Global Resources responds to 13 questions from NorvanReports on acquisition of Bogoso Prestea Mine
Future Global Resources (FGR), a subsidiary of Blue International Holdings and new owner of the Bogoso Prestea Mine has responded to 13 questions posed to the mining firm by NorvanReports.
The questions posed to FGR by NorvanReports follows a re-joinder issued by the gold exploration company on the back of an article titled “Save the Bogoso Prestea Mine, Act Now” published on norvanreports.com and other publications we have followed keenly since the Sales and Purchase Agreement between FGR and the old owners of the mine Golden Star Resources (GSR) came public.
NorvanReports through the 13 questions posed to Andrew Cavaghan Executive Director of Blue International Holdings/FGR, is seeking to find answers to the many questions and misconceptions surrounding the acquisition of the Bogoso Prestea Mine from previous owners – Golden Star Resources.
Find below the questions posed by NorvanReports and FGR’s answers to them.
Note: Questions have been boldened with answers to the questions in italics.
1. In the SPA with GSR, Blue International Holdings warranted that it had the funds for working capital and purchase price payments to GSR for the ensuing 12 months after agreement signing. Meanwhile, Andrew Cavaghan, Blue International Holdings CEO told UK regulators in Company fillings, for the financial period ended a month before SPA completion, that the balance sheet of Blue was a negative US$11.3 million and that to continue as a going concern, Blue needed to secure equity or debt capital for the 2021 financial year. In other words, Blue Holdings simply did not have the funds contrary to the claim in the SPA. What do you say to those who have the view that Blue International misrepresented her true financial capacity in the SPA and colluded with GSR to deceive the investing public in Canada, the United States, and Ghana where GSR was listed and of course the respective securities regulatory authorities and exchange commissions of these countries?
Neither Blue, nor FGR are in breach of any obligations or representations they made in the SPA. Blue International is an investment holding company for the 150 private investors and intuitional investors who have already invested over $110m into Blue International and its projects in sub Saharan Africa. The balance sheet for Blue International Holdings Limited reflects the fact that the monies invested into Joule Africa, and more recently FGR, have not been capitalised but are instead treated as costs in the profit and loss account, in line with International GAPP.
2. In the Blue International news release on July 19, 2021, Blue International indicated that “Future Global Resources (FGR) has discovered material inaccuracies in the information provided by Golden Star Resources (GSR), which FGR relied upon in deciding to acquire the Bogoso Prestea mine. The financial impact of those inaccuracies is significant. FGR will continue to investigate the inaccuracies. FGR notified GSR of the inaccuracies last week and required GSR to indemnify it in respect of the resulting financial losses it has sustained, in accordance with the provisions of the Bogoso Prestea purchase agreement.” How were these inaccuracies ascertained?
FGR engaged third party geologists and mining engineers who worked closely with the Bogoso Prestea management team to evaluate the mine plan that it had inherited based on operational data during the first six months of ownership.
2.1. Were the inaccuracies confirmed by the Minerals Commission of Ghana or any other third party entity?
This matter was validated by third party geologists and resolved privately with GSR in a revised SPA.
2.2 Is FGR and Blue International suggesting the technical report publicly filed by GSR to public agencies and securities regulatory authorities and exchange commissions with respect to the Company Group Material Property (titled NI 43-101 Technical Report on Resources and Reserves Golden Star Resources Ltd., Bogoso/Prestea Gold Mine, Ghana on March 29, 2018 on which the SPA was based) contain material inaccuracies?
No comment
3. GSR and Blue International Holdings have publicly filed to regulators and to the knowledge of the investing public the amount of US$53 million in environmental rehabilitation liability to Ghana’s EPA. Can you confirm that FGR/Blue International Holdings have posted an Environmental Bond in the amount of US$53 million USD with the EPA of Ghana as of now and is it all cash?
FGR is in full compliance with all EPA bonding requirements
3.1. If there is a non-cash component, how was it secured?
FGR is in full compliance with all EPA bonding requirements
4. Can you confirm if the US$20 million investment referenced in your rejoinder was declared to the Minerals Commission and Bank of Ghana? How was this investment capital deployed in support of the operation and expansion of the mine?
Investment was provided as interest free shareholder loans from Blue International to the Bogoso Prestea mine, and was made in accordance with all applicable laws and regulations.
4.1 How much debt or equity finance or both did Blue International Holdings secure in the year 2021 as planned and what were the funding sources?
See response to 4. above for an explanation of the relevant capital raised and invested in the Bogoso Prestea mine
4.2 Were the assets of the mine used to secure any debt financing during the years 2020 or 2021?
Yes
5. Ghana’s Minerals Commission indicated on August 2, 2021, in a Daily Graphic publication, that FGR/Blue International has not invested a penny in the BPM. Blue International/FGR is now claiming it has invested $20 million in the past 12 months rolling. Is Blue International claiming, by the rejoinder, that the Minerals Commission of Ghana is lying to the Ghanaian public in this regard?
The quantum of funding invested in Bogoso Prestea is set out above.
5.1. The Bogoso Prestea Mine is the only revenue generating asset owned by Blue International Holdings. Is BPM, therefore, funding the rest of Blue International Group operations at present, as can be deduced from the recent financial statements of Blue Intentional?
No – this statement is inaccurate.
5.2. If this deduction is wrong, what is the valuation of Blue International at present (aside BPM), and what revenues are generated from its other assets/subsidiaries if any?
The other assets of Blue International are all privately held development assets with over $90m invested in them (at cost). The valuation placed on these by Blue International and any third party investors is a private matter.
6. Is Blue International Holdings and FGR indebted to any of our state-owned enterprises/agencies, example VRA, GRiDCo or Minerals Commission etc. and if so, how much?
Bogoso Prestea was acquired with historic debts to these agencies.
7. As of June 2020, the average number of employees at Blue International was 5. How many are Blue International employees now excluding the management and workers at BPM? How do you juxtapose your current number of Blue International employees with the view that you are sending Ghanaians out of job to accommodate your new hires at Blue International Group level?
Blue International acquired a mine that had been losing money for over four years and was in serious danger of being closed without immediate intervention. Blue International has been working hard with local management to change operational practices and review the cost structure and shape of the company so as to reach economic sustainability. Changes made in the first year include the localisation of 4 previous expatriate positions and the recruitment or promotion of 13 Ghanaians into key management positions, as well as the retrenchment of surplus positions.
8. Was your restructuring plan sent to the Minerals Commission, the regulator of the space approved before you went ahead laying off workers at the PBM and did the long-term plans submitted to the same commission include Ghanaian job losses?
The restructuring was done in compliance with all applicable laws and regulations.
8.1 We have information that you owe a lot to local suppliers, some of whom have threatened not to continue supplies soon. Can you confirm this and what are the plans to ensure these local suppliers are paid?
FGR inherited significant creditor balances from historic suppliers and has been working with these suppliers to agree payment plans and reduce these balances. However, the lower than expected grade (referenced above) has placed added pressures on all parts of the business.
9. Norvan Reports has not been able to verify the claim that the UK and EU are directly/indirectly shareholders of Blue International/FGR. Can you clarify this claim and offer any publicly available confirmations?
The statement is correct and these arrangements are a matter of public record.
10. A section of the Ghanaian public are of the view that the arrangement of FGR/Blue International and GSR is fraudulent and will lead to FGR/Blue International leaving Ghana with all debts to the state, suppliers, contractors, employees, and environmental liabilities left behind: this is especially so because GSR has not demanded or received any payment from FGR/Blue International over the last 15 months after the “sale” and is currently leaving Ghana and delisting from all stock exchanges. What is your response to this view?
This is both inaccurate and offensive. Blue International is working hard to save a mine that was until recently destined to close. It has done that despite a number of unforeseen challenges, continuing to commit funding to the mine, and it is now starting to see the benefit of this with a reduction in AISC and an increase in Au oz produced. As a foreign investor in Ghana, Blue International relies on the continued support and cooperation of its government, regulators and other stakeholders to make this happen.
11. There are calls from various quarters asking for investigations into the conduct of GSR, Blue International Holdings/FGR, and the approving public officials in the events leading to, during, and after the SPA for the sale of BPM especially regarding the veracity of the information made available to public officials and institutions. Do you welcome such investigations?
We do not believe any such investigation is necessary given that neither FGR, GSR nor the Minerals Commission are in breach of any laws, regulations or contractual commitments, and substantial progress is being made in turning the Bogoso Prestea mine around to create a multi-generational asset.
12. How much is the revenue generated from BPM operations over the last 15 months?
This will be a matter of public record once the audit is completed.
13. How much has FGR/Blue International paid to GSR as at today following the signing of the SPA for the purchase of the Bogoso Prestea Mine
The SPA is a matter of public record, and FGR and Blue International are in full compliance with all terms of this contract.
Responses to Norvan Reports 26.01.22 (1) by Fuaad Dodoo on Scribd