According to the Deputy Finance Minister, Charles Adu Boahene, the upfront capital to be raised from the listing of Agyapa Royalties Limited will be invested in developing the country’s gold resources.
He said this in relations to government, under the Minerals Income Investment Fund Act having created a Special Purpose Vehicle (SPV), Agyapa Royalties Limited, to maximise the mineral royalties received by government from mining companies.
In explaining this, he said,
“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.”
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 and 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 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.
Mr Adu Boahene went on to say that,
“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.”
According to the ministry of finance figures, in 2019, Ghana’s income from mineral royalties stood at about US$200 million.
At a time that the precious mineral (gold) 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 claimed to be partly responsible for the increase in the dollar price of gold.
