Golden Star Resources flexes muscles, refuses to pay severance to workers

Workers of Golden Star Resources (GSR) have said despite efforts to get the mining company to pay them severance packages, the firm is unwilling to do so.

Unlike Bogoso Gold Limited that made severance payments to its employees during the takeover of the gold mine by GSR in 1999, GSR is failing to do same as Future Global Resources (FGR) prepares to take over.

A letter written on behalf of the CEO, Andrew Wray, a copy of which is in the possession of GhanaWeb shows that GSR has refused to recognise the group Employees Affected by the Bogoso Prestea Sale (ELAPSE).

The group comprises of permanent workers of Bogoso-Prestea mine who have been affected by the sale and whose severance payment is being denied them.

The letter by GSR was in response to a notice by employees that fronting as ELAPSE, they have engaged the services of a lawyer to lead negotiations.

But GSR said it does not recognise ELPASE and hence will not engage them.

“We respect the right of every employee to seek and obtain independent advice relevant to his or her circumstances, however, should you wish to raise your own concerns as an employee, you are able to do so in accordance to Company’s policy and your concerns will be addressed accordingly.

“With this in mind management, unfortunately, is unable to engage with ELAPSE as GSBPL has no such recognised group,” the letter signed by Ahmed-Salim Adam for and behalf of the CEO stated.

The workers are wondering if the government, which holds 10 per cent stake in GSR, will watch the foreign company that claims to have made over $45 million profit to flout the labour laws of Ghana.

Justification for severance payments

An Asset Purchase Agreement (APA) - usually between companies - is an agreement that finalises terms and conditions related to the purchase and sale of a selling company's assets.

In such agreements, the sale and purchase of a company's employees do not include employees of the selling company as the employees although assets to the selling company do not make up or constitute the capital assets of the selling company and hence are not 'valued and priced' as part of the total costs of the company to be purchased or sold.

APAs usually do not bode well for employees of the selling company as oftentimes job security enjoyed by the employees are threatened. This is because the majority of the employees of the selling company could lose their jobs in the event that a new owner decides not to renew their employment contracts.

To compensate employees for the possible loss of jobs - which happens most of the time - the selling company provides for its soon to be redundant employees, a severance package or payment.

In 1999, Bogoso Gold Limited, then-owners of the Bogoso-Prestea Gold Mine, after the sale of the gold mine to Golden Star Resources undertook the widely accepted practice of making severance payments to its employees.

It gave in advance, three months’ notice to employees for their severed appointment as employees of the company on the back of the sale of the firm to new owners, Gold Star Resources.

Bogoso Gold Limited set precedence for GSR as it treated its employees and the then workers at the Bogoso-Presta gold mine fairly.

But despite the precedent set by Bogoso Gold Limited, GSR seems to have decided to do otherwise.

Controversial sale

GSR on July 27, 2020, announced the sale of its 90 per cent interest stake in the Bogoso-Prestea gold mine to Future Global Resources (FGR) for $95 million.

FGR was to pay an initial amount of $5 million cash consideration but that has been differed to six months later – March 30, 2021 – pending finalisation of FGR’s reclamation bonding process.

The remaining $90 million is to be paid over a three-year period during FGR's underground mining operations.

The conclusion of the sale agreement was announced by Andrew Wray, a former JP Morgan investment banker and Chief Executive Officer of GSR, on October 1, 2020.

GSR, under the leadership of Mr Wray, was unable to turn around the fortunes of the Bogoso-Prestea underground mine as investments totalling $70 million have been sunk into mining operations.

FGR is a private company, formed only on December 30, 2019, as a subsidiary of the private investment company Blue International Holdings with large shareholdings in Joule Africa - a primarily renewable energy company operating in Africa.

The acquisition of GSR Bogoso Prestea mine, therefore, marks their first foray into mining, and this has raised a lot of eyebrows given the fact that more experienced mining firms such as Newmont Corporation and Goldfields showed interest in buying GSR Bogoso-Prestea.