Part 1 & 2

Book cover (Ashanti Gold by Edward S. Ayensu, 1998)

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. 

Part 2:

Randgold’s investment in AngloGold Ashanti’s Obuasi gold mine is worth watching. Mark Bristow must move because he sees beauty in this old lady. A new team with fresh eyes and hopefully starting a new chapter in the long history of this wonderful gold mine which just keeps on giving. It is such an extraordinary gold deposit.

Marcel Proust said it well: the real voyage of discovery consists not in seeking new landscapes, but in having new eyes.

My travel to Ghana and Obuasi in 1990 was part of my first gold exploration assignment to Africa. It was my first campaign of prospecting in the Birimian goldfields of West Africa. I was spent three months prospecting around the old Antubia gold mine without onsite communication with the outside world. It was a long way from Tara to here. A long way from drilling for zinc in the patchwork shades of green just north of the Navan mine in County Meath.

In following years I returned and migrated further north into the Birimian. There was always the push to get an edge and prospect in the less explored frontiers. To try and be a first mover or at least with the leading pack into remote districts like the Siguiri Basin.

Exploration took me prospecting into southern Burkina Faso east of Bobo Dioulasso and to discovery and unlocking of gold resources in Mali (Yanfolila 2003). Exploration took me across the Sankarani River into eastern Guinea (Mandiana 2009) and the Buré Goldfields. There was a prolonged interlude in the mid 1990’s in the Lake Victoria Goldfields of Tanzania (discovery of Nyanzaga 1996). The Mandiana gold property in Guinea was where I stumbled across the second largest colony oforpailleurs that I have ever seen in Africa. Bulyanhulu in the Lake Victoria Goldfields of Tanzania in 1994 was the largest congregation of small scale miners which I had ever seen. I returned to Ghana in 2000 with a small junior gold explorer called Moydow Mines just in time to help with the fleshing out of a major gold discovery. The Ntotoroso gold deposit along the Yamfo-Sefwi gold belt became the core of the world class Ahafo gold mine. But that is another story and I have broken the thread of the golden yarn I am trying to spin.

The gold price spiked in January 1980 at US$850 per ounce. In Ghana in 1982 there was the “second coming” of Flight Lieutenant Jerry John Rawlings. Rawlings overthrew the Limann government citing economic mismanagement. Actually economic mismanagement was a euphemism for hunger in the streets. Rawling’s was the son of a Ghanaian mother and a Scots chemist born in 1907 in southwest Scotland. Over the next few years the gold price had plummeted back to a range between $300 and $400 per ounce. But in 1985 the price had started to rise again. The economy had started to improve after the launch of an Economic Recover y Programme in 1983. The Programme was backed by the IMF, the World Bank and Western aid donors. It was recovery from a low base. Ghana’s economy was still on its knees.

In 1985 AGC got a much needed shot in the arm. The loan for $159 million from the IFC was for an ambitious five year expansion and improvement plan. It was also around this time that my former boss Noel Kiernan first arrived in Ghana. He was only equipped with a suitcase of personal possessions, belief and an idea. He was 52 years old at the time. The rising gold price and I suspect that Noel needed a new frontier and challenge. He was also attracted by the fact that the government of Ghana had passed a new Minerals and Mining Law. The new mining law copied the successful Chilean model. A consequence of the new Law was that the state allowed AGC to keep 45 percent of its export earnings. This provided a vital source of capital to repay its loans and invest for future expansion.

Noel Kiernan was involved with the development of three gold mines in Ghana. Two gold mines in the Birimian greenstones were Konongo and Wassa. The largest of the three mines was Teberebie in the Tarwaian Banket. Noel later founded another junior gold company called Moydow Mines International which discovered the Ntotoroso gold deposit in Ghana and which made lots of money for its shareholders.

We had to drill test the main ore shoot at Ntotoroso at least below 300 metres to see if it had legs. We had over one million ounces of an inferred resource above this level along a one kilometre strike. Thefillet mignon containing most of the gold had a strike of only a couple of hundred metres. It was a peculiar gold deposit because it was not where it should be. It was in a granodiorite intrusion about one kilometre east of the main break. The main break was a regional shear zone. There were Birimian metavolcanics on one side and metasediments on the other. The country rocks hosting the gold system had been in a pressure cooker on a low heat for a few million years. That happened during the Eburnean orogeny and why the rocks metamorphosed. The granodiorite intruded into dilational zones within the shear while it was moving. The clue was the foliation. Ntotoroso should have been on a secondary structure running off the Sefwi shear zone.

Two Russian geologists called Victor Litvinov and Yury Deryugin discovered Ntotroso. They would never have made the initial discovery if they had not moved outside of the agreed programme. And if Noel Kiernan had not backed his team with a bet that they would succeed make a discovery.

So the discovery became world class. Where it should have been was on the large scale. It was a challenge about where to look. On the project scale we had to pierce the ore-shoot at depth below thefillet mignon. Was there control by the intersection of a cross structure? Maybe the target was a dilational kink along this subsidiary structure? Maybe a mega slickenside or striation which controlled the plunge of the high-grade mineralisation? There is a motif in the modelling of these Birimian orogenic gold deposits. Obuasi or Ntotoroso, they are all different in their own way but there is a common theme to unlock. It is more of an art than a science: a creative application of the science.

We argued long about where to collar for first hole. There was passion and conviction. Joe anticipated that the shoot plunged to the south. The Russians had a simpler interpretation based on what had gone before. I agreed. We were as sure as can be that the shoot was vertical. The second hole cut ten metres averaging 15g/t gold at about 350 metres below surface. Happy days!

In 1994 the Ghana government sold 20-25 percent of its equity interest in AGC. This was a sell into a share floatation of AGC on the London and Ghana stock exchanges. Two years later AGC listed on the New York Stock Exchange. It was the first African company to appear on Wall Street. Its CEO was Sam Jonah.

Sam Jonah joined AGC as a labourer in 1969 straight from high school. That was the same year that Lonrho ambushed AGC. The following year he won a company sponsorship to study at Cambourne School of Mines. Later he went on to study at London University’s Imperial College. At the age of only 36 he became the first African Chief Executive of AGC.

In 1998, Ashanti Gold was the third largest gold mining company in the world. In May 1999 the Treasury of the United Kingdom decided to sell off 415 tons of its gold reserves. By August 1999 the gold price had fallen to $252 per ounce. Even quality high gold projects like Ntotoroso moved to the back burner.

The slide spooked AGC like many other big gold producers. There was palpable fear of further slides in the gold price. It scrambled for some kind of insurance policy. Goldman Sachs AGC’s financial advisers recommended that Ashanti buy large hedge contracts on the price of gold.  Hedging was very popular with gold companies at the time.  Advice is one thing but taking it is the reponsibility of the client.

In September 1999 fifteen European Banks with links to Goldman made a surprise announcement. Together these banks decided to reduce selling of gold on world markets for five years. The announcement immediately drove up gold prices and by October 6th it had risen to $362 per ounce.

Ashanti had no option now but to buy high and sell low to make good on the contracts. A few weeks later, Ashanti found itself sitting on $570 million worth of losses. Ashanti was on the brink of bankruptcy its stock price from an all time high of $25 per share to a just $4.62 per share. It was a near-death experience for the old lady.

Ashanti’s near collapse led finally to a buyout by its largest African competitor in 2004. AngloGold bought Ashanti for at a distressed price. The new “combo” became the world’s second largest gold producer. Incidentally Goldman Sachs was a financial advisor to AngloGold. All is fair in love and war and it seems in business too.

So how prolific mine was this gold mine? How easy did it surrender its riches? In 1990 management finally decided it was maybe a good idea to form an exploration division. That was the year of my first visit to Obuasi. It had all been quite easy up to that point. Poke the load ahead of the face with underground drilling. There was never more than a couple of years of inventory at best. Two post graduate geology students came from Leicester University. They would bring in new ideas and not be contaminated by any groupthink. It would start the process toward new discovery. One of these young men was Nick Laffoley. In his khaki shorts and knee length socks Nick cut a Kiplinesque figure even without the pith helmet. Nick’s appearance was almost a throwback to that a bygone time and the early history of the mine. I remember taking Nick and his American girlfriend to a Chinese restaurant in Kumasi. Even in those days in the heart of the Ashanti region you could find an outpost of oriental cuisine. Nick was to die young of natural causes only seven years later. He had been only a year as Vice President of Exploration at Nevsun Resources. He was just getting started.

Before I headed west and north Nick showed me a three dimensional Perspex model of the mine. It had sliding screens in two dimensional painstaking detail. The screens slide into position to create a three dimensional model. To create it was to know every little wrinkle in the beast. This now seems like light years from the modern computer models which can be changed in a nanosecond. The model showed the plunge of the gold mineralising system from surface to the north. The known strike of the system at that time was over a distance of five miles and to a depth of a mile. A week later I arrived in Antubia. My team of local recruits cut traverses with machetes through the jungle. They uncovered through the tangled overgrowth the rumps of the old colonial mine buildings. Not far from a riffle structure I discovered a fractured headstone with the name Keane. I suspect he must have been a miner or geologist of Irish descent. He died of malaria in this remote jungle in the early part of the last century. It made me think of Edwin Arthur Cade who also died in lonely sweats and shivers in 1903. Just 14 years before Tiny Rowland was born in India. Great mines do not just happen. Great mines are made.

© John P. Barry (P.Geo)


John P. Barry
Managing Director of Irus Consulting Ltd. and Professional Geologist

A widely travelled and highly experienced economic geologist, John Barry is a confidential counsellor to the likely investor contemplating a considerable investment in the intricate business of mining metals. Don’t take a “flyer” and trust altogether in luck and invest your money in an exploration or mining project on the strength of a printed prospectus or the advice of an interested friend without the preliminary investigation and site visit of a reliable geologist with a basic grasp of commerical reality.  Irus Consulting provides  strategic and practical management advice and guidance  to its clients.  Time is a precious commodity for my clients, and indeed myself, as it relentlessly ebbs away and so I  try as best I can to avoid the mediocre - those projects and their champions which do not engender enthusiastic belief and passion.

Irus Services Include:
- High-level strategic advice
- Practical guidance and assistance on project sourcing, acquisition and implementation
- Rapid identification of key project value-drivers and potential fatal flaws.
- Capacity building and coordination of  external consultants.
- Design and targeting of effective marketing campaigns

John Barry was part of very small teams which discovered and sourced several multi-million ounce gold deposits in Africa. He has worked as an economic geologist since 1988 and as a consultant and then responding to the entrepreneurial spirit he was a founder and manager of three public resource companies which raised a total of US$70million. These resource companies are currently successfully exploring and developing gold and base metal projects in Europe, and sub-Sahara Africa. John has seen a lot of rocks working for consultancies such as CSA in both Ireland and Australia and as Senior Associate Geologist with Chlumsky Armbrust & Meyer LLC which is based in Denver.  He is a specialist in zin-lead exploration and in 1992 joined the exploration team which discovered the Lisheen zinc-lead deposit in Ireland as the resource was being expanded in the first couple of years after discovery and in 2008 led the first non Polish exploration company to successfully enter and acquire a major resource-project in the Upper Silesian Mississippi-Valley-Type (MVT) zinc-lead district  in southern Poland – the world’s largest minerlised district of its kind. John (P.Geo and EurGeol) holds a Master’s Degree in Geology from Pennsylvania State University and a MBA from the Edinburgh School of Business, Heriot-Watt University, Scotland.

“I would like to think that I have shown the tenacity, patience and focus required to implement many of my better ideas over the years and that I have learned valuable lessons from some failures. I believe one of my strengths is in communicating quite complex technical ideas in a concrete way that can be easily understood. I am a team- builder and motivator by projecting my enthusiasm and vision for a project. I am committed to the development of young geologists through supportive delegation.” John is now moving more from managing public companies to freelance consultancy and a more advisory role so as to concentrate increasingly on assisting management in effective exploration and discovery. He is Managing Director of his own Exploration Management and Geological Consultancy: Irus Consulting Ltd. Please visit for more information and free newsletter registration. 

John is now moving more from managing public companies to freelance consultancy and a more advisory role so as to concentrate increasingly on assisting management in effective exploration and discovery. He is MD of his own Exploration Management and Geological Consultancy – Irus Consulting Ltd.

Click here to download John’s Statement of Qualifications as a PDF

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