Minerals Fund provides 15 answers over Agyapa Royalties deal

Minerals Income Investment Fund (MIIF) has explained the set-up of the Agyapa Royalties following concerns raised by the Minority.

The agreement concerning Agyapa Royalties, a Special Purpose Vehicle (SPV) company was approved on August 14 by parliament in line with the MIIF Act, 2018 (Act 978). This is aimed at using the state firm to secure about $1 billion through prudent management of mineral resources.

The critics have cited a lack of information on the shareholders of the firm as well as fears that Ghanaians will be hoodwinked if the agreement goes ahead.

However, MIIF has indicated that the firm is wholly owned by the government with the aim of listing on the local stock exchange and other renowned bourses across the globe.

MIIF explained in a statement that listing will require strict adherence to corporate governance practices in line with the guidelines of the managers of the various stocks markets where it will be listed hence the running of the company would not be shrouded in secrecy.

What is MIIF and Agyapa Royalties?

MIIF was formed by the Ghanaian Parliament, pursuant to the Minerals Income Investment Fund Act, 2018 (Act 978) with the key objective of maximising the value of Ghana’s income from its mineral wealth for the benefit of the Ghanaian citizens and to maximise the minerals’ income in a sustainable and responsible manner. The aim of the fund is to ensure that Ghanaians fully benefit from the wealth that is created in the mining sector.

The purpose of MIIF is to hold and manage the equity interests of the Government of Ghana (“GoG”) in mining companies, receive mineral royalties due to the GoG from mining operations, provide for the management and investment of the assets of the Fund, finance further development of the mining sector, and monitor and improve flows into the mining sector.

Regardless of who is in power, the MIIF is the custodian of Ghana’s future mineral revenues. In terms of the MIIF Act, the powers of MIIF include the creation of a Special Purpose Vehicle (“SPV”) in any jurisdiction in furtherance of its objectives, and the listing of the SPV on any reputable stock exchange that MIIF considers appropriate, and assignment of all or any of its rights to mineral income to a SPV in furtherance of the objects of MIIF.

Currently, MIIF is the sole shareholder of Agyapa Royalties, a SPV that is expected to list on the London and Ghana Stock Exchanges. Agyapa Royalties is expected to acquire a portion of the royalty, rent and other income from a number of gold assets in Ghana, comprising 12 producing gold mines, as well as four development assets, most of which are owned and run by major international gold mining companies.

The purpose of listing Agyapa Royalties Limited is to allow the Government of Ghana, via MIIF to raise non-debt capital to invest in the country without further increasing our national debt burden. The issue of equity in a company that is currently 100%-owned by the GoG through MIIF is a new and innovative way to raise funds that can be invested for the benefit of Ghanaian citizens into the future.

The GoG is seeking to raise a significant amount of funds from the listing of Agyapa Royalties Limited and will also expect to receive regular annual dividends in the future from Agyapa Royalties Limited, which will be reinvested in the country to finance strategic capital investments such as economic infrastructure to spur socio-economic development and enhance the lives of all Ghanaians. Ghana must invest in itself and build a future through investment, not aid.

“What is very important to remember is that MIIF will remain as the majority shareholder of Agyapa Royalties Limited. This means it will retain majority shareholder control and receive the majority of the Company’s dividends when declared and paid,” the statement stressed.

“Lastly, Ghana has always been and will always be a leader on the continent. This is but the latest example of our ability to be forward-thinking. We are the first government to implement this transformational and innovative way to raise funds. This is a pioneering template for Africa on how to achieve value add-on exports. It is the intention of Agyapa Royalties Limited to be an African royalty company and to leverage Ghana’s position as the leading gold producer in Africa to build an African royalty portfolio,” the release explained.

15 issues raised by critics and responses by MIIF :

1. The agreement makes it impossible for a future government to replace managers of Agyapa Royalties Limited.

Agyapa Royalties Limited will adhere to international corporate governance standards as would be expected of a publicly listed company. As such, the Board of Directors of Agyapa Royalties Limited will be up for election each and every year at the Annual General Meeting.

Shareholders will be able to vote on the election of the Company Directors. It is the MIIF that will be the largest shareholder in Agyapa Royalties and therefore will exercise its right to vote on the Directors.

2. The agreement is based on the amendment done to the Minerals Income Investment Fund Act, which was approved by Parliament but not signed into law yet by the president, therefore making it illegal.

All the agreements relating to the transaction are subject to the MIIF Act and any subsequent amendments.

3. It is a bad idea to mortgage future revenues from gold royalties for a lump sum of money today.

This is not mortgaging the country’s future revenues. This is an investment into our future which will create an upfront sum of capital upon the proposed listing date and, thereafter, regular dividends, both of which will be reinvested into the country to finance strategic capital investments such as infrastructure to spur socio-economic development and enhance the lives of all Ghanaians.

The cost of capital through this transaction is, therefore, lower than any debt capital raised, with the added advantage of no repayments. Given the gold prices are at an all-time high, the timing is right for the shares to be listed in London and Ghana. We believe Ghana must invest in itself and build a future through investment, not aid, and this is a key way to achieve this.

4. Agyapa is the current government’s attempt to mortgage 75.6% of the country’s mineral revenue in perpetuity.

Agyapa Royalties will receive 75.6% of royalties from a selected portfolio of underlying gold mines (12 producing mines and four development assets) under the current mining leases. In addition to the initial capital raised, 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. Agyapa Royalties will continue to benefit the Ghanaian people, regardless of which political party is in power.

5. Shareholders other than GoG will own 75.6% of Ghana’s royalties and therefore its future.

This statement is untrue. At the closing of the IPO, Agyapa will hold rights to receive 75.6% of the royalties from the 12 producing mines and four development assets in its portfolio. Agyapa is not acquiring the rights to all off Ghana’s royalties. Further, as discussed above, the GoG, through the MIIF, will continue to be the majority shareholder in Agyapa and therefore will benefit from the receipt of the majority of dividends from Agyapa.

6. There is a lack of information about cash flows, expenses, prospectus, etc.
While the prospectus in connection with the proposed listing was not shared as the listing has not commenced, all material and necessary information was shared with Parliament so that an educated vote could be made by the Members of Parliament.

7. This is owned by President Nana and Gabby’s friends.

This is not true. Currently, the company is 100%-owned by MIIF on behalf of the GoG. Once the Company is listed on the London Stock Exchange and Ghana Stock Exchange, MIIF will be the largest shareholder, and hence Agyapa Royalties will be ultimately majority-owned by the GoG.

8. As part of the total cost of executing this transaction, the legal firm handling it is expected to receive a fee of $10 million.

This is incorrect. Moreover, once Agyapa Royalties Limited is a publicly listed company, the expenses incurred will be available for scrutiny in its inaugural annual report.

9. Agyapa Royalties Limited was incorporated in the British Virgin Islands and/or New Jersey.

Agyapa Royalties Limited has been registered in Jersey, Channel Islands. Jersey was selected as it is a well-established jurisdiction for holding-company purposes and as a listing jurisdiction. It is also a familiar listing vehicle on the London Stock Exchange, where Agyapa Royalties Limited is expected to have its primary listing.

10. The agreements were passed without the proper oversight and debate. The agreements were passed in the same process as all other agreements are dealt with in Ghana. The agreements were in line with the objects and powers of the MIIF as set out in the MIIF Act.

11. The Ghanaian people will not benefit from this transaction.

The Ghanaian people will benefit from this because the capital raised will finance strategic capital investments such as infrastructure and also in mining in collaboration with local equity participants to spur socio-economic development and enhance the lives of all Ghanaians.

It allows us to invest in ourselves and build a future through investment, not aid. This is central to the Ghana Beyond Aid philosophy. It is also an opportunity to raise funds without increasing the national debt burden, and there are no re-payment obligations, interest payments or the need for a guarantee.

12. Agyapa Royalties Limited surreptitiously changed its name from Asaase Royalties Limited.

Agyapa changed its name from Asaase upon seeing that the name Asaase is used by 21 other companies. To ensure there is no confusion, the name was changed to another name that is not as widely used.

13. Agyapa Royalties Limited is related to Asaase Radio. There is no relation between the two.

14. This is another PDS or AMERI in the making.

This is not going to be the case. Agyapa Royalties Limited is being created with Ghanaian’s best interests in mind. Agyapa Royalties Limited will adhere to international corporate governance standards.

15. With Agyapa Royalties registered in Jersey, Channel Islands, it will be difficult to oversee the firm and know who are the shareholders.

As a publicly listed company on the London Stock Exchange and the Ghana Stock Exchange, Agyapa will be fully transparent about its ownership. All large shareholders will need to disclose their position (when they buy or sell shares).

Agyapa Royalties Limited will adhere to international corporate governance standards so as to give its shareholders, including the GoG, peace of mind that it is doing everything in the most transparent and appropriate way. Indeed, in Agyapa’s annual reports, the names of the significant shareholders will boldly be shown.