The richest gold mine in Africa is off life support. And some life it has been at Ashanti’s Obuasi gold mine in Ghana. All 118 years of production spanning two world wars. Mines like most worthwhile endeavours in life need champions to make them work. Mark Bristow, Randgold’s CEO is the latest champion to be handed the baton.
At the end of 2014 AngloGold ceased underground operations and retrenched the workforce. Just a month ago Randgold concluded a potentially substantial investment agreement on the Obuasi gold mine. Randgold will lead and fund a plan designed to re develop the Obuasi Mine.
The “richest square mile in Africa” lies among the foothills of the Moinsi and Kwisa ranges. It lies some 200 kilometres from the sea in the hinterland of the Gold Coast between the Oda and Offin Rivers. Sir Richard Burton, the intrepid Victorian explorer called it the Neglected El Dorado. British soldiers returning from the various Ashanti wars (1824-1901) returned with lumps of smoky quartz streaked with glittering gold.
In 1990 I arrived at Obuasi to rest and supper on my way to a explore for gold in a remote area of western Ghana. I was headed for a small historical gold mine on the frontier with the Ivory Coast. My brief was to prospect and generate drill targets around the pre World War II Antubia gold mine. Even though it is only 25 years ago I had no satellite phone or mobile phones. Every couple of weeks I made the long journey to Obuasi to drop off drill core samples for assay. The first half of the seven hour journey was on bone-jarring laterite bush roads. These visits to Obuasi every fortnight were a life-line and my only contact with the outside world. It was also an opportunity to phone home at extortionate rates and let family know I was thriving.
In 1890 two Fante merchants, Joseph Ellis and Joseph Binney from the Cape Coast crossed the River Pra. Beyond was the kingdom of the Adansi. There they found extensive diggings for gold. Galempseii crushed rich gold-bearing quartz veins. The pulverized quartz was panned for gold. In retorts amalgams of gold and mercury were heated to recover the precious metal. The galempseii paid heavy tributes to the King of Bekwai. The two Josephs claimed 100 square miles covering the gold workings and far beyond.
The mine was first named the Ellis Mine. Shafts were sunk on the reefs. At shallow levels below ground drives and cross-cuts formed a gilded interlace of tunnels. Stopes were excavated on the richest lodes.
During my visits to Obuasi in 1990 I heard many anecdotes about the mine over a cold Star at the club house. I heard of a lode so rich in gold that some underground stopes had to be locked behind bars. The motherlode jailed between shifts in case the gold might flee in the night.
At the start in the 1880’s mining equipment was shipped from Smith & Cade in London. Binney sent ore samples to Smith & Cade but there was little response. Then in 1892 Edwin Arthur Cade joined the firm as a partner by marrying one of Smith’s daughters. Cade received a compelling request from Binney to “come and see”.
Cade had a sample of ore from the Ellis Mine assayed at Johnson Matthey in London on April 20th 1895. It ran eight ounces of gold per ton (274g/metric tonne). Cade was decisive and hurried to the Cape Coast. The mine was not in the tranquil, languid Cape Coast region. It was in the interior 200 kilometres from the coast in e dense jungle ruled by the fearsome Ashanti. Cade did not waste any time in moving on the Ellis Mine. He signed a sale agreement with the two Josephs at Cape Coast Castle on 27th August 1895. He placed a deposit for £200 and so began the Côte d’Or Mining Company. Edwin Arthur Cade, a man who knew so little about mining, became owner of the richest gold mine in Africa. Some 25 million ounces were mined in the first hundred years from 1897 until 1997. Tragically the Gold Coast venture was also responsible for the ending of his life. He died of malaria at the age of 46 in the Offin River village of Dominassi. His grave is in the European cemetery at Obuasi.
In 1896 the Nana Prempeh I the Ashanti King was “destooled” and deported. The Ashanti Kingdom became a protectorate under the direct control of the British. It was a priority now for Cade to have his mining agreement ratified by the new authorities. Cade registered a new company in London called Ashanti Goldfields Corporation Ltd (AGC) on June 11th 1897. The assets and liabilities of Côte d’Or Mining Company were then transferred to AGC. On the same day AGC listed on the London Stock exchange with a nominal capital of £250,000 in shares of £1 pound each. In early trading the share price soared to £18 as the alternative investment risk in South African mines increased in the political unrest leading into the Boer War.
From Cape Coast the Fante dragged mining gear onwards through the jungle. Loads were also head-carried inland to the Ellis Mine in 27 kilogram bundles. From 1898 until 1899 some 3,108 tonnes of ore yielded 2,544 ounces of gold. That is an average grade of 0.8 troy ounces per tonne or 27g/t gold. The following year the grade had doubled with 4,675 tonnes of ore yielding 7,812 troy ounces of gold. What is particularly interesting to me is that a few years later the grades started to decline. Straight access to the ore shoots through adits driven into the side of the hills was not effective. The lodes were neither as many nor as extensive nor in some cases of such high value as the miners had hoped. It was now time to focus on plumbing the depths. It is tantalising to contemplate how many more gold mineralising systems explorers have since missed. How many may be blind or partly blind along the trend of these Birimian greenstone belts. Prospectors blind indeed to the riches which lie beneath and maybe never to be revealed until the end of the world. It is just a matter of fortune when erosion exposes a gold mineralising system near surface. At depth this gold which coagulated in the beginning several kilometres deep in the earth’s crust.
Expatriate staff and stores ran short during the Great War and forced cut backs in production. The Ayenim and Justice mines closed. Mining focused on the richest and most profitable Ashanti mine. After the War costs soared and the mine lost labour to the extraordinary cocoa boom. This delayed opening of the two mines until 1933. There were important discoveries of new ore shoots on the Obuasi fissure in 1937. Mining was going down now much more than drifting along strike.
The gold mine was one of only a few in the then Gold Coast (Ghana) which remained open during the Second World War. By September 1946 historical production had reached 5,751,008 ounces from 5,872,855 tonnes. The cumulative average ore grade at that point was almost an astonishing troy ounce of gold per tonne of ore. The Gold Coast government received one ounce out of every 20. That represented a five percent royalty which at that time totalled £1.75 million. AGC paid twice this amount in export duty on gold premium.
After the Second World War many “jungle boom” mines in the region had closed down. Exploration stopped because gold mining was unable to attract any major foreign investment.
It was common for a reef to pinch out. Usually it picked up not far beyond the face. Sometimes though finding the mineralised vein was a lot more challenging. I heard a story about two Italian mining contractors during such hard times. They continued to drift without pay. It was on the basis that if they discovered the lead they would have a contract in perpetuity. They found the rest as they say is history.
On October 20th 1968 Tiny Rowland made an audacious bid for Ashanti Gold Corporation. A Warburg banker arrived at Ashanti’s merchant bankers in London to deliver the bid. Arthur Winspear was Rowland’s emissary and Morgan Grenfell was Ashanti’s merchant bankers. Rowland had become CEO of Lonrho in 1962. His modus operandi was to jet around Africa like a ricocheting ping pong ball doing deals. He had nurtured strong relationships with local politicians. He expected no less than such politicians to obey the rule of reciprocity.
Rowland’s biggest coup was the acquisition of the Ashanti gold mines in Ghana. At first AGC rejected his bid as a derisory under valuation of the company. But Rowland had already out manoeuvred his quarry. He had convinced the Ghana that “you should earn more profits”. Rowland exhorted that “you and not the old colonials should be the owners”. He told them “Lonrho was their natural ally against the imperialists” because of its track record. Lonrho had supported African nationalism in Malawi, Zambia, Kenya and elsewhere throughout the continent.
He was right about fairness and sharing. The biggest thing that struck me when I arrived in Obuasi in 1990 was the contrast. Such a poor parasitic town clustered around the spine of such a rich gold mine. A stark contrast which was clear to all except those in denial between this richest of gold mines and the miserable poverty of the host town. How little had permeated into this maze of shanty huts on surface from the vaults of gold beneath. All it seemed at the time which permeated the town was the stench of open drains and septic sewers.
In 1966 the National Liberation Council (military government) challenged the gold mines. How fair was its share? Rowland’s proposition in 1968 was quite simple and there is genius in such simplicity. The government should end the ninety-year mining lease granted in 1897. Lonrho would get a fifty-year lease in return for giving 20 percent of the new company to then government. The government would have an option for a further 20 percent. If the government exercised its option then it was to pay Lonrho £1 per share. Lonrho of course would earn an annual management fee.
Shortly after AGC rejected Lonrho’s bid the news leaked that the Ghana government had cancelled the mining lease. AGC’s share price collapsed and the Board capitulated. It felt it had no other option but to accept just £15 million (£6.26 million) for the mine. A sum of £3m in cash plus a limited share issue.
Octogenarian General Sir Edward Spears had managed the British public company since 1937. In response to Rowland’s “unimaginable, flabbergasting pincer movement” Spears threatened to flood the mine. Rowland commented that “the definition of an honest man is when his price is too high”. Spears had been decorated four times for bravery during the First World War. He had rescued de Gaulle from France in 1940 and he remained an adviser and friend to Churchill. Such lofty connections would have helped him assume the Chairmanship of AGC. He was boss of the “richest square mile in Africa”. Why need any experience in mining? He was now becoming more and more eccentric and autocratic. He spent only two months of the year in Ghana. Chairmanship of AGC had afforded Spears the luxury of eating frozen grouse flown out from Britain. There is a photograph of Spears resplendent in all white from pith helmet to flannels. He is striding out like Stanley at the head of a procession to open a new mosque in Obuasi in 1951