My Take On KPMG’s Audit Report On The Aspect Of The Upstream Minerals Audit

Thanks to KPMG for recommending the termination of yet to be initiated Contract between GRA and SML particularly concerning the Upstream Minerals Audit and the President accepting this recommendation and directed that the Upstream Minerals audit etc should not be materialized. So on this aspect, Manasseh Awuni and his team must be commended for raising an alarm repeat on this aspect which the President responded with the audit by KPMG and on receipt and study of the report, he directed the termination of this aspect.

Once again, I submit that the Large Scale Mining Companies under the Ghana Chamber of Mines have put in place good measures for accounting of minerals as stated in three of my previous Articles which were published on the vehicle of the esteemed Modern Ghana including the one championing the very laudable Gold for Oil Deal as published in April 2023.

Pardon me to digress to elaborate why I say the Gold for Oil Deal is as a laudable one because it will help the State to gain additional foreign exchange from the Small Scale Mining Sector which is bedevilled with poor accounting of gold leading to hoarding and smuggling of gold beside the serious environmental hazard with the associated risks caused by Small Scale Miners which will demand the State to spend money and time for the reclamation process.

In some of my previous submissions, I stated that by the requirements in the Mining Regulations and Regulations/Policies of the Large Scale Mining Companies under the auspices of the Ghana Chamber of Mines based on very good risk assessments they normally put in place efficient and effective measures in line with the dogma of Probity, Transparency and Accountability by Metallurgical Security Code that ensured and are ensuring no leakages of minerals produced by the member Companies to ensure efficient accounting of the gold or bullion produced.

Furthermore the code covers effective accounting of the sales of the bullion by the Large Scale Mining Companies to the State of Ghana through GRA, Bank of Ghana, and the Minerals Commission and to the Share Holders through the Board of the Large Scale Mining Companies.

So, once again, I submit that no need for adding cost to cost with a superfluous costly upstream minerals audit by a third party to be contracted by the State concerning accounting for the process of minerals by the Member Companies of the Ghana Chamber Mines for Large Scale Mining Companies.

So I hereby endorse both the aspect of the recommendation and the authentication (authorization) by KPMG and His Excellency President Nana Addo respectively for the termination of the yet to be materialized Contract between GRA and SML on the aspect of the mineral audit in order to arrest our usual syndrome of adding cost to cost otherwise looking for an avenue to exploit. Hence, once again I commend Manasseh Awuni for a very good work with regards to his investigation which trigged the Audit by KPMG which culminated in the directive of the President for the termination of the yet to be initiated contract.

The State of affairs in the Mining Sector with regards to the Large Scale Mining Companies on the production of minerals through mining and processing of the gold ore up to the smelting of the gold concentrate in a well secured and strong Gold Room and the shipment are done under a defined Metallurgical Security Code which ensured 100% accounting for the Minerals say gold with the associated other minerals like silver and copper to the relevant institutions of the State of Ghana, to the Board and the Buyer or external Refinery.

This is so due to a system of strict supervision, monitoring, authentication and securing of the minerals by more than six security layers including security of the minerals in effective security infrastructure which include double fence wall of the Process Plant under CCTV Coverage, production in a double locking fortified Gold House with a very strong safe of Chubbsafe make from UK with double locking system for securing the obtained minerals that is after effective weighing of the bullion and the related gold samples normally kept for a week in case of any dispute arising from any discrepancies in the results of the Assay in Ghana by the Company and the Assay by the Buyer. The samples under strict measures are returned to the Gold House for the next smelting in case the Refinery is ok for the minerals contents

The keys for the double locking system are kept separately by the Head of Security and the Metallurgy Manager and mustering of the keys must be documented to include date, time, reason and to be confirmed with signature, the return of the keys must be documented and the documentation must be supported with time and signature.

The weighing, labelling and boxing of the bullion and the subsequent sealing of the boxed bullion with both the seals of the Company and GRA or Custom Service intact and the further weighing of the sealed boxed bullion and the documentation of the acts especially the weighing of the bullion, of the number of the boxed bullion as secured with seals of the State etc are conducted by a combined team made of a stationed Senior Officer of the Custom Service Unit of the Ghana Revenue Authority (GRA), the Security Manager and the Metallurgy Manager.

Strict searching system with Metal detectors of a walkway and hand held metal detectors and effective CCTV Cameras which footages are strictly monitored by CCTV Operators and the requirement of playing back by the Head of Security and the preservation of the CCTV footages for a longtime are other measures. .

As stated the details of the individual bars of gold (bullion) including the weight are covered with the Signatures of the Custom Officer, the Metallurgy Manager and the Security Superintendent. The Custom Officer is the person who sends the details on the minerals to the Commercial and Financial Manager of the Company to compute the gold sales using the ruling spot price of gold for the day of exporting as proclaimed by UK Market and or Bloomberg etc.

These above narrated processes ensure probity, transparency and accountability that gives a good accounting for the minerals say gold so produced by the Company to GRA, Bank of Ghana, the Board and the Buyer through the Transporting Agent of the buyer or the Off Taker usually an external buyer or Refinery like Rand Refinery in South Africa.

Gold is sold by unit of troy ounces and the gold so produced is always with other minerals like silver and or copper dubbed as commercial impurities, so the weighed bullion and the weighed samples of each bullion bar and the quantity of bars are recorded in three books in the Gold Room namely the Bullion Book, the Sample Book and the Laboratory Service Book as appropriate.

The details in each book are signed against by the Gold Room Supervisor, Security Manager, the Custom Officer, the Metallurgy Manager and when needed by the Laboratory Rep of a Competent Laboratory. A Security Supervisor is detailed to escort the Lab Rep to the Competent Assay Laboratory for the determination of actual state of the minerals that is the weighed or real quantity of gold and the quantity of each of the impurities and the securing of the sample in a strong safe.

The result from the Assay are submitted by the Laboratory to the Commercial Manager and the Custom Officer. The Commercial Manager uses these details with the support of the proclaimed spot price of the gold, silver and copper by the UK Market, to come out with the sales of each mineral. He then communicate the sales details of the bar of bullion by an official mail with date and signature and submitted same in original copies to GRA, Bank of Ghana and the Off Taker or the Refinery outside Ghana. That of the Refinery is both soft copy by an authentic email and a hard copy bearing the same details with signature must accompany the boxed bullion to the Off Taker.

The Off Taker pays for the exact quantity of gold per troy ounce and also pays for the exact quantity of each of the impurities. But by the Global Standard procedure for accounting in the Mining Industry, say for a Gold Mining Company example Golden Star Mine Ltd which will surely record high levels of gold each bar but low quantities of silver and copper as impurities account the cash realized as total gold sales or a Copper Mining Company like Codelco in Chile which funny enough may rather record higher levels of gold as impurities than the Copper which is the main mineral the Company is working or looking for.

The Copper Company say Codelco accounts the total cash receipt as Copper Sales. That is to say that the standard procedure globally is that the affected Mining Company is to regard the sales of the combined minerals as 100 percent sales of her main product so in the case of a Gold Mining Company as gold bars sales in cash or for a Copper Mine as 100 percent sales of Copper.

So on receipt of payments or per the governing law, the Gold Mining Companies will account as total or 100 percent sales of gold to GRA for the payment of taxes, Royalties and to Bank of Ghana for the determination and authentication of the exact amount to be repatriated to Ghana as decreed by relevant law.

Those persons with fear of the gold and other minerals that may be found or obtained during the mining of Atlantic Lithium, which is a new entry in the Mining Industry should note that the Company is to put in place and use efficient Metallurgical Security Code to account for the Lithium and the residues of gold, silver, copper and other minerals as impurities which will be associated with the lithium ore to be mined. The gold and other impurities will only help raise the total sales of the Company which will be taxed by GRA and repatriation of the percentage of the Sales as per laws of Ghana under the supervision and monitoring of Bank of Ghana.

Let me reiterate that the Rep of the Assay Laboratory under the supervision and monitoring by the Custom Officer and Security Superintendent record the authenticated weights of the samples from each bullion bar in the Laboratory Record Book to be covered by the signatures of the mentioned affected persons as well of that of the Laboratory Manager. The samples are then kept in strong safe with double keys one each keys kept by the Laboratory Manager and Security. These are secured for a week as part of probity and accountability measures awaiting for confirmation of the contents of each bar of bullion with the Assay done in a competent laboratory agreed by both the Company and the Off Taker mostly an external Refinery. If no dispute on the contents of the gold, silver and copper, the lab samples are returned to the Gold Room in the next smelting week.

To sum up, let me state that the state of the sales of the Gold content of each bar in troy ounces and the state of the weight and sales of any associated silver, iron or copper content as impurities are computed in dollars by the Finance Manager of the Company and the Custom Officer, using London and or Bloomberg’s spot prices to get the total mineral sales in dollars and the combined effect is termed as Gold sales for accounting to GRA Head Office by the Custom Officer for the payment of the required tax, Royalties to the State through Bank of Ghana and the percentage of the sales to be returned to Ghana as required by law.

The computed details are reported to the Gold Buyer say Rand Refinery in South Africa initially by a soft copy by email by the exporting Company with the Mining Lease as an advancing warning to the Buyer of the Bullion cargo in transit.

After the normal security protocol, on the day of exporting or shipment of the gold, the boxed bullion seals are checked to ensure intact and then weighing is done by the Custom Officer, the Reps of the Company and the Agent of the Buyer after which the details are endorsed with the signatures of the affected persons.

It is then transported under escort by the Custom Officer supported by armed personnel from the Ghana Police and guards of a contracted private security Company by the Buyer designated as the Transporter or the Buyer’s Agent. It is a normal practice that when the gold is transferred to the Agents of the Buyer at the Plant Site, under date, time and signatures of the relevant persons, the risk of the gold is deemed as transferred to the Buyer, who becomes the risk owner.

So the Company is paid for the minerals and any problem with the bullion is between the Buyer with his Agent and their Insurance Company or Companies. The gold is sent by the escorting party to Kotoka International Airport Accra either by Helicopter or by road depending on the state of affairs. .

So, Large Scale Mining Companies with Mining Lease, as stated above have been accounting properly for both the quantity and weight of gold bars plus the content of copper, silver in the gold bar and most important the total revenue accrued from 100% sale of the gold, the 100% sale of the copper, and 100 % sale of the silver to a Refinery outside Ghana. No hoardings of minerals are allowed nor a hold up of the gold produced by the Large Scale Mining Companies under the auspices of the Ghana Chamber of Mines for more than one week to reduce insurance cover and any mishap including fall in the price