An old Welsh legend tells the story of a Prince who, as a keen hunter, kept many dogs for hunting purposes. One day, as he went hunting, he noticed that his favorite dog Gelert was not among the pack. He returned home after a long day’s hunt to be greeted by a blood- soaked-and-dripping Gelert bouncing off him, wagging its tail in ecstatic joy. Horrible thoughts rushed into the Prince’s mind. Had his favorite dog killed his one-year-old son, he wondered? To his shock, he found the toddler’s nursery with walls splattered with blood, cradle overturned, and furniture ripped apart. His worst fears were realized, he was sure.
In a fit of anger and grief, he drew his sword and plunged it swiftly into Gelert’s heart. As Gelert howled in loud agony as it lay dying, the Prince heard the soft cry of a child emanating from the overturned cradle. His dear son was unharmed! Next to the overturned cradle lay dead the largest wolf he had ever seen. Brave Gelert had fought and
killed this wolf to protect his master’s infant son. But for this good deed, it received for wages, a sword thrust deep into his heart in cold anger with pain and death as toppings.
Now with deep unquantifiable remorse for his instant vigilante “justice” the Prince cried loud with regret and sought to honor his favorite valiant but-now-dead Gelert with a compensatory “befitting” burial. How he so wished he had not been that quick to judge and execute instant “justice”. But it was too late.
“Nothing in all the world is more dangerous than sincere ignorance and conscientious
stupidity” – Dr Martin Luther King Jr.
“There is a way which seemeth right unto a man, but the end thereof are the ways of death.” – Proverbs 14:12. Gold mining at Obuasi started officially in 1897. Till date, Obuasi alone has produced an estimated 33,000,000 ounces of gold.
Use the link below to access the full details
https://pelangio.com/projects/ghana/obuasi/#:~:text=The%20Obuasi%20mine%20has%2
0produced,grade%20of%208.62%20g/t
With gold selling at $2,031.71 per ounce as of February 23rd, 2024, the amount of gold produced at Obuasi in today’s money is equivalent to over 67 Billion Unted States Dollars! Yet, some one hundred and twenty-seven (127) years later, after over 67 billion US dollars of mining the ‘noble metal’ from Obuasi – alone – what has Ghana to show for it? There is nothing much to write home about! Indeed, God richly blessed our land and made it pregnant with gold and many other minerals. Unfortunately, most of the gold wealth in our beloved country (and other minerals as well) don’t end up in the country to change our people’s lives and economic destiny for the better.
They are siphoned off to foreign lands because of poor negotiating skills, bad deals, and poor know-how of how the Western financial system that runs the world works. History can easily forgive our ancestors for the bad deals they signed up for; but posterity cannot and should not forgive us if we refuse to learn from the past errors and keep repeating the same mistakes of our ancestors whiles expecting different results.
But “those who cannot remember the past are condemned to repeat it” so says the great philosopher George Santayana. Using Obuasi as our Exhibit A, for the 127 years of gold mining there which resulted conservatively in 67 Billion USD of wealth creation, only approximately 3.35 Billion USD of this wealth (representing about 5%) was availed to our people over the course of these 127 years, mainly in Royalties. Approximately, 63.65 Billion USD left the shores of our country over this time period.
We cannot continue this way! The first rule of holes says, “when you are in a hole you stop digging.” We have got to change with the times. We must learn and adapt to the way the West conducts business if we are going to change the economic trajectory of our beloved country from one of penury to generational wealth.
By God’s grace we have succeeded in learning and excelling in the actual technical aspects of mining: producing some of the most premier mining engineers in the world at our local tertiary institutions. Our biggest challenge today is how to come up with the financial capital for such capital-intensive projects as mining so that we can own the entire mining company. Fortunately, these days, you can find citizens of our country thriving at all the top echelons of academia, business, and finance globally. They understand how the modern financial system works. The Western financial system works differently. It is not something that comes intuitively. It is extremely complex and is a form of engineering on its own (hence the term financial engineering). It cannot be understood without careful in-depth
study.
I hear a lot of talk about “what God gave us” with regards to mining Royalties and AGYAPA. What those who say this fail to realize is that these Royalties range from 3 to 5% of the generated mining revenue. Fellow Ghanaians, God did not give us such underground health so we can debate, argue, or even fight over the 5% pittance and totally forget
about the 95% of the revenue! We should not be so zoomed in on the pittance…the 5%…and lose sight of the big picture – as the 95% gets siphoned off our shores.
Any paradigm shift in our thinking or approach to the mining industry should be geared towards complete ownership of the revenue…100%…not just the 3-5% pittance called Royalties. This is the only way we can fully realize the full worth of God’s blessings on our beloved country. Since we already have the technical skills when it comes to the actual exploration and exploitation – with the many world-class competent mining engineers we produce – our
focus should be on the managerial skills, and most pertinently on how to raise the financial capital required to make everything possible.
It is possible, fellow Ghanaians! But let me put out this full disclosure and disclaimer: I have no personal financial interest in the mining sector. I have never owned, participated in, operated in, held a meeting about, been approached about, consulted with or for, etc. I have never had any dealings in this industry.
I write only to express my opinion as someone who has some exposure to the Western financial system as an investor in the Western financial/capital markets over some years and has studied how their system works.
Ever wondered how a business started in a car garage (as Apple and Amazon were) got access to the massive financial capital needed to expand and grow into the behemoth that they are today? How did Steve Job and his friend Steve Wozniak get the money to expand Apple? And why were they willing to part with a portion of their 100% ownership of the company and bring in other owners as shareholders? Were they nuts for not clinging to their 100% ownership? What is it that they know about how to create wealth that we don’t? Or were they being naïve or outright stupid by parting with their 100% ownership of Apple so that they could raise capital from the stock market? Did their effort yield a more positive result than if they had just clung to their 100% ownership? Will they have become the multibillionaires they are/became had they not parted with their 100% ownership by getting listed on the stock market? When Tesla went public on the stock market, June 29, 2010, with its Initial Public Offer (IPO), the cost of a share of its stock was $17 at the opening of trade that day.
Some 8 hours later, at the close of trade, this $17 per share had gained 40.5% value and was now selling at $23.89 per share. The company had a market capitalization (value of the company) of $2.2 Billion. Fast forward today Tesla has a market capitalization of 601.53 Billion dollars. A $10,000 purchase of Tesla stocks at IPO in 2010 would today be worth a staggering $2,643,178! Money is funny. You can either focus on your 100% ownership or
focus on creating wealth. But you may not have it both ways.
So when a few years ago I learned about our government’s intention of doing away with our ancestral approach to mining…doing away with our apparent content for the pittance – the 5% Royalties – as the 95% revenue are siphoned off our shores…I felt so proud of our people.
Finally, we have come of age! We are making the long overdue paradigm shift that will ensure wealth creation and retention in our country to fully benefit our people and develop our country. In the West, the AGYAPA Royalties route the government seeks to go is a no-brainer! This is why.
You have a streaming source of revenue with the potential to expand. You have two major options. You can maintain the status quo of over 127 years – that is, wait at the end of the year when the mining companies declare their revenue then take your paltry 5% and throw a party in celebration or you can follow the standard of practice in the West that actually creates wealth and economic prosperity. But there is a loud and vociferous chorus of people (albeit with crude understanding of financial markets) who wield a loud megaphone and have arisen in agitation and protest any change of the status quo.
They want us to be content with being the “car garage” company we have been for the past 127 years. They have no interest in us following the standard of practice of today. And somehow folks who should be able to do in-depth research and educate themselves about this issue have yielded their complete trust in these quasi thinktanks that are grossly mischaracterizing the process, either due to sincere ignorance or out parochial interests.
It makes one wonder, who are those pulling the strings at these thinktanks? Surely, their position on this issue does not inure to the benefit of the Ghanaian people. Are they playing their loud tunes to the call of those who are paying these pipers? There is definitely ‘interest parties’ behind them. The hard position on this issue taken by IMANI inures to the benefit of those who have been siphoning the 95%. How else could one understand why a Ghanaian would fight this? Scrutiny, critique, calls for transparency, etc are all vital and should be encouraged. But to say the government should rescind and/or shelve this effort is unpatriotic to say the least. The enemy within is far more dangerous than those without.
Unfortunately, sometimes those who should know better pry on the ignorance of the people and whip up resentment amongst them so they can rise up against something that may actually inure to the benefit of the people (Think Obamacare in the US and how the Republicans were able to whip up the anger of the downtrodden to vigorously oppose a health insurance policy that Obama had designed to save them (the downtrodden) from
catastrophic financial and healthcare issues).
Now this is AGYAPA. Our land is rich in gold and other minerals. We don’t have the necessary financial resources to fund the mining exploration of our God-given wealth. But we are tired of the status quo; where 95% of the wealth is lost to foreigners. So, let’s do this: Let us use the current streaming 5% Royalty revenue that we receive from only 14
mines out of the many in our country – 12 in operation and 2 prospective – as a pivot to get access to the financial capital that will make it possible for us to eventually own the 95% revenue that we currently lose out on. So what we will do is form a company and call it AGYAPA. We will then transfer the 5% Royalties from these 14 mines to AGYAPA as revenue.
Then we will divide up the wealth of this company into smaller pieces called shares or equity. We (sovereign Ghana) will keep 51% ownership of the equity to ourselves. Then the remaining 49% we will sell them on the stock exchange to retail (individuals; including you and I), corporate bodies, and institutional investors – just like the Teslas, Amazons, Apples, and Microsofts do.
The initial value of each stock will be predetermined tentatively by financial experts but we do know that what normally happens is that as soon as people start to buy the stock (as soon as there’s any resemblance of demand) the price or value of that stock rises up much more than what these experts had predicted (and that is how, as aforementioned, Tesla’s IPO rose up from $17 per share to $23.89 per share
within 8 hours of trading).
The net effect is that we can raise a huge lumpsum (without any issues of interest rate payments or compounding, paying off/back any principal, or having to pay back to any investor as this money is not a loan). With this lumpsum money we can then invest in setting up mining companies ourselves, exploring and exploiting our natural
resources by ourselves to create generational wealth by owning 100% of all the economic activities in the value chain system.
The investors will have no stake or ownership in the new mining businesses we create because of the money we raise from them. They will have their stake only in the 14-company Royalty that makes up AGYAPA. It is also worth emphasizing that the new mining companies that we will develop will be separate entities from AGYAPA and will be owned 100% by the people of Ghana. Revenue and Royalties from the new mining companies will not be part of the
profit/dividend/revenue of AGYAPA as they will not be part of the original 14-company Royalty that constitutes AGYAPA. As the new mining companies expands, we can then develop a value-added chain system in our own country and not export just raw materials abroad…thereby creating many ancillary local industries, providing many local jobs for our youths, whiles creating generational wealth right here in our own homeland; wealth
which will be retained in Ghana.
Over time, as they expand even more, the new mining companies can go international by having branches in our neighboring countries; just like Newmont, for instance, is an American mining company but owns mines across many countries including our own country – Ghana.
It is possible! It bears repeating that all these will be achieved by pivoting off from our current 5% Royalties in only 14 of the many mines we have in our country. Royalties from the other mining companies that are not part of this 14 will remain untouched by AGYAPA. And of the 14-mining company Royalties that constitutes AGYAPA, Ghana will still own 51% of the shares. The value of the 49% we will be offering on the stock market will definitely exceed
the IPO price, so we stand to raise a much higher amount of money than what the initial worth of AGYAPA is. This may sound counterintuitive, but it is absolutely correct, because the value of a company to the stock market investor is not just what the revenue of the company is today, but what the potential of the company is in the future.
This also explains why a relatively smaller company like Tesla that made 1,845,985 cars from only 5 factories in 2023 is valued way more than Toyota which made 10,307,395 from 67 factories worldwide in the same year. Looking at the numbers you would think investors would value Toyota much better than Tesla. But not so! Tesla has a market capitalization of 632.58 Billion US dollars whiles Toyota’s is 392.32 Billion US dollars as of the time of writing this
article.
So what explains this counterintuitive figures? Investors see more potential value in Tesla than Toyota. It’s not just about the raw figures, but mainly about prospects or potential. If the market feels or thinks that AGYAPA has a brighter future, it will value it much more than the IPO. And the interesting thing is that, as the market capitalization
rises, Ghana can decide to raise even more capital by selling more shares, if we so choose.
But what is in for the investors? They benefit in the long term from the increasing value of the stock on the market. They can sell these stocks later for profits as and when they so choose. They also get benefits if AGYAPA decides to pay dividends. But AGYAPA is not under strict obligation to pay dividends. The Board of the company can decide that they want to reinvest dividends into the company and not pay it to shareholders.
This is a frequent occurrence for investors. Since July 5th, 1994 when Jeff Bezos founded Amazon, not a penny has ever been paid as dividends! Profits from this behemoth of a company are reinvested back into it to expand it more and create more wealth. So those who are worried about foreigners getting our money in the form of dividends should allay their fears. It does not necessarily follow suit.
All in all, AGYAPA should be a no brainer! But over here in Ghana, it appears that some of our people are wired to thrust the sword first before asking questions. Mob action appears to be in their DNA. It is the same mindset that killed a policy that would have benefited the country…having DCEs elected and accountable to the people directly…the same mindset that has literally taken the lives of innocent men and women via vigilante justice over
trumped-up allegations…the same mindset that is killing the effort to not make us only content with the 5% but to also go after the 95%. AGYAPA is an “Oliver asks for more”. if implemented correctly, it has the potential of creating so much generational wealth in our country – wealth that will be retained within our beautiful country.
There is even the chance that over time the mother company of AGYAPA, The Minerals Development Fund could begin to buy back shares and ownership of already existing mines in the country and increase our share of these companies and help us get a piece of the 95% that hitherto we generally have been losing out on. So let us not be too quick to judge or dismiss. Let us with dutiful study educate ourselves first about how the modern financial system works, then about AGYAPA and not start off by making unfounded allegations and demanding with sincere ignorance that this venture be scrapped.
It is only the interests of the neocolonialists which will be threatened by AGYAPA. Because it is a threat to the financial windfall they have been enjoying for the past 127 years. As we wise up and demand what is truly ours, the game is over for them.
Hence, we should expect that they are not going to go out quietly. They will go out screaming and kicking. Unfortunately, they have their men within us to do their bidding. Folks who are willing to sell their birthright for a cup of lentil soup and bread. Be wary of them. They speak as if they have our interests at heart but rather, they are aligned with their masters and will play their pipes to any tune their (neocolonialist) masters call for.
Any pretense of concern that since AGYAPA will be registered offshore and so that entails an opaque thing is hogwash. Every company wants to pay the least amount of their profits in taxes. Offshore financial centers are akin to Free Trade Zones. They are both very legal. And they are both established to entice capital inflow by incentivizing profits via low to no taxes. Jersey (not New Jersey) is an offshore financial center legally created by the United
Kingdom.
For a cursory read about Jersey use the link below:
https://en.wikipedia.org/wiki/Financial_services_in_Jersey
Western financial systems are highlight regulated and monitored. They have high standards. To be listed and to attract investors, companies are required to submit to their high standards. The core of the company’s management, its financial books, and many others are subjected to intense scrutiny by top experts before any clearance for listing on the Stock Exchange is given.
So we should not be crippled with concern about who are the directors, etc. Directors will come and go. But we cannot allow such tunnel vision to detract from the goal of complete ownership of our wealth.
It is possible for us to enjoy the full benefits of our blessings and not be content with the
pittance of our ancestors.
Source: Dr. Ato Kwamena Baidoo| Contributor
