Government to terminate agreement on Prestea mine

The Ministry of Mines and Energy says government has engaged Barnato Exploration Limited (Barnex) and Golden Star Resources (JCI) in discussions to resolve respective concerns in the Prestea Mine.

A statement from the Ministry in Accra said the discussions followed governments wish to have a mutual agreement for terminating existing agreements between it and JCI/Barnex.

Barnex is a South African mining firm and JCI is from Canada.

According to the statement, which, was reacting to recent press releases by JCI/Barnex, government selected the two firms when it divested its interest in Prestea Goldfields Limited, a wholly owned subsidiary of the State Mining Corporation in 1994.

"The divestiture process gave special consideration to bids which had a plan for continuing the existing underground mine. JCI/Barnex was selected because its bid expressed a commitment as well as a capacity to sustain and improve on the existing underground operations," the statement said.

JCI/Barnex, however, gave notice in 1998 of their intention to end management responsibility and sought to close down the underground operation but Ghanaian employees...negotiated with the government to continue operating.

The statement explained that Government obtained the consent of JCI/Barnex which led to the formation of Prestea Gold Resources Limited (PGRL).

But the previous agreement allowed them (JCI/Barnex) to undertake other exploration activities and produce a 'bankable' feasibility report for any new mining project they were interested in.

Government granted a request by the company to extend submission of the report in 1999.

"Barnex have still not submitted any such report but have given every indication that they will not proceed with any project in the concession area," it added.

The statement said "it is in the light of the clear indication that JCI/Barnex is not willing to proceed with any project within the Prestea concession that government has indicated...its wish to have a mutually agreed basis for terminating existing agreements".

Government's main concern at this stage of discussion seeks to ensure that certain environmental obligations arising from the surface mining operations by Barnex should be addressed while revitalisation of the underground operations which occurred with the formation of PGRL should be sustained.

"It is the expectation of government that a mutually acceptable basis for terminating the agreement with JCI/Barnex relating to the Prestea Mine will be established soon," the statement added.