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ECOWAS Bank jumps into big gold mine fight in Ghana
acquired 100% of Azumah Resources and committed itself to building the Black Volta mine
SUMMARY:
- The Ecowas Bank for Investment & Development (EBID) claims to have signed an agreement to finance the Black Volta Gold Mine.
- Black Volta Gold Mine is owned by Azumah Resources.
- Azumah Resources is owned by Ibaera Capital.
- Ibaera Capital insist that it is not involved in any such deal.
- EBID is a regional multilateral development bank expected to abide by the highest transparency and governance standards.
- It is incumbent on EBID to clarify this strange and bizarre confusion.
- While we are on the subject, word has gone out that the President of Ghana is seeking to “intervene”.
- That intervention is much warranted as this situation definitely has political undertones. There are two Directors of Azumah Resources who were nominated by Engineers & Planners (E&P) on the back of an agreement with Ibaera that the latter has terminated, and which is now the subject of arbitration in London. Those two Directors are all appointees of the President, manning key institutions, namely the SSNIT and Ghana Infrastructure Investment Fund. E&P’s own admission of regulatory influence compounds this perception. The Chair of Governors of Ecowas Bank is another appointee of the President, his serving Finance Minister.
- Hopefully, wise counsel will prevail and an amicable solution shall be found that benefits the people of the Upper West and strengthens Ghana’s reputation as a mining jurisdiction for both local and international investors.
- Creating national champions in any sector, including mining and oil & gas, requires sophisticated strategies, not buga buga.
One of the murkiest, most fascinating and most sensational fights for control of a gold mine is playing out in Ghana as prices of the yellow metal shoot for the sky.
This saga is part boardroom battle, part political fiesta, and part policy mess. Everything rolled into one katanomic soup.
If you are only interested in the drama, you can skip the next section on the long history of the project and go straight to the section headed: “Black Volta Saga”.
The Long & Checkered History of Azumah
The company at the centre of it all is called Azumah Resources Ghana Limited (Azumah Ghana), incorporated in February 2005, with shares held in the Isle of Man by a company called Eaglehand. Its antecedents, however, are in Australia.
The overseas entity was registered on 23rd December 2004. A little under a year later, it listed on the Australian Stock Exchange (ASX) in a bid to raise $6 million.
In January 2006, the company, Azumah Resources, was officially admitted to the ASX. Its main asset was a reconnaissance mining license held through its Ghana affiliate (Azumah Ghana). It also became apparent that the entrepreneurial mastermind behind the company, David Harper, held shares alongside a complex web of vendors, a situation that attracted a bit of concern from the exchange.
David Harper’s love for Azumah Nelson accounts for the name chosen for the connected entities in Australia and Ghana.
The vendors did not include Geodrill, which David had founded in 1998 to penetrate the mining services industry in Ghana. But it was clear that there was an intricate web of ownership across all of them.
The primary business logic appeared to consist of various mining service providers undertaking exploration operations and consulting on behalf of Azumah in exchange for shares. At least until such a time as the company could raise more money.
At any rate, soon thereafter, a $3 million deal was signed between Azumah and Geodrill for the latter to undertake exploration drilling on behalf of the former.
By this time, the company’s three main deposits – Kunche, Bekpong, and Julie-Collette – in the Wa-Lawra area of Upper West were taking shape, with resource accretion occurring steadily. Not all the resource growth had happened organically. It was a series of shares and royalty-based transactions in 2009, for instance, that brought the Julie, Collette, and Josephine prospecting licenses into the fold.
By 2015, the company’s exploration had found enough gold to support a mine with a life of 7 years, producing at about 90,000 ounces of the precious metal per year.
Despite marquee investors like Macquarie, JPMorgan and Dundee holding shares at various points, money was tight. It had become clear over time that the Australian stock exchange was not sufficiently hospitable to Azumah as far as its fund-raising goals were concerned.
The company owed the government various fees and had considerable challenges with the community which felt that they had been around for much too long without evidence of any job creation or other economic activity.
In 2017, Ibaera walked through the door. A private equity fund founded by former mining executives, Ibaera, brought industry insight in addition to money. The Ghanaian government granted permission for Ibaera to inject $US 13.5 million into the ongoing exploration effort to ready the mine for development in exchange for a total of about 47.5% of the company’s shares.
James Wallbank, Peter Hairsine, Jon Hronsky, Paul L’Herpiniere, and Chris Alexander were brought in by Ibaera to beef up the Azumah team. The economic reserves of gold identified at this time were about 624,000 ounces of gold.
By 2019, intensive exploration and prospecting work had pushed up the reserves. Sometime in 2019, the reserve estimate hit the psychologically important 1 million ounces mark. The resource estimate, meanwhile, was climbing towards the 3 million ounce level. (Some of Bekpong’s gold-bearing ore was underground and therefore outside the scope of the initial open-pit mining strategy.)
In March 2020, pleased with itself because of the reserve growth, Ibaera, through its IGIC fund, acquired 100% of Azumah Resources and committed itself to building the Black Volta mine, where the ore from all the viable deposits would be brought for processing. Ibaera committed to a $40 million investment to position the mine for full construction.
