Proceeds from Agyapa IPO to fund refineries, other projects - Adu-Boahen

The upfront capital to be raised from the listing of Agyapa Royalties Limited on the London Stock Exchange and Ghana Stock Exchange, as well as regular dividends thereafter will be invested in developing the country’s gold resources, the building of gold refineries and world-class gold certification institution, Deputy Minister for Finance, Charles Adu Boahen, told Business24.

“The funds raised during the listing and future profits will be re-invested in mining and the building of gold refineries and certification companies that will refine and certify gold produced locally and for other countries in the sub-region.

We have been mining for centuries and we don’t have many gold refineries and gold certification companies,” Mr. Adu Boahen said in response to the specific infrastructure projects that funds raised in the IPO and thereafter would be expended on.

Government, under the Minerals Income Investment Fund Act has created a Special Purpose Vehicle (SPV), Agyapa Royalties Limited, to maximise the mineral royalties received by government from mining companies.

In 2019, Ghana’s income from mineral royalties stood at about US$200m, according to Finance Ministry figures.

At a time that the precious mineral is trading at a high of about US$2,000 per ounce, experts have argued that though gold is not a currency, it rivals the dollar as an international reserve asset and has thus benefited from the desire for diversification given the fall in real interest rates.

The dollar’s depreciation from the end of the first quarter of this year against the euro and most other major currencies itself is partly responsible for the increase in the dollar price of gold.

Under an investment agreement between the Minerals Income Investment Fund and Agyapa Royalties Limited, the Fund has assigned its right to receive 75.6 percent of royalties from a portfolio of 12 producing mines and four development assets to Agyapa. In exchange, Agyapa will issue shares worth US$1bn to the fund.

The planned Initial Public Offer (IPO) of Agyapa will offer some of the shares held by the fund to investors in order to raise about US$500m.

At the end of the IPO, the Government of Ghana, through the MIIF, will continue to be the majority shareholder (51 percent) in Agyapa Royalties.

The 12 producing mines from which royalties will be drawn include Damang, Iduaprim, Bogoso, Wassa, Asanko, Tarkwa, Akyem, Ahafo, Obuasi, Edikan and Chirano. Four development assets which hold significant gold deposits cited under the agreement are: Namdini, Enchi, Wa and Bibiani.

This novel idea of maximising gold royalties means that the MIIF is expected to continue to receive dividends from Agyapa and will continue to receive the royalty revenue from other operating mines in Ghana that are not related to Agyapa Royalties.

“It must be noted that Agyapa will have the right of the first offer for future gold assets outside the 16 mentioned in this agreement,” Mr. Adu Boahen said.

UK registration and matters arising

Agyapa Royalties is registered in Jersey, Channel Island, given the favourable tax regime that exist there.

A local company, ARG, has also been duly registered to receive the royalties from MIIF for onward transmission to Agyapa Royalties as a means to satisfy the legal hurdle in the transaction.

As a publicly listed company on the LSE and GSE, all Agyapa’s large shareholders will need to disclose their position – when they buy or sell shares-. The company is expected to adhere to international corporate governance standards as to give its shareholders the needed assurance.