Barrick Gold Corporation, a Canadian miner based in Toronto has sold its Western Kenya licenses, held by its former subsidiary Acacia Mining to Guernsey-incorporated Shanta Gold, a Tanzania-focused mining company.
Seven Western Kenya gold mining licenses confirmed sold in a transaction amounting to Ksh. 1.46 billion ($14.5 million) for over 1,161 square-Km area that includes Siaya, Kisumu, Kakamega and Vuhiga counties. The cash and shares transaction gives Shanta Gold its first asset outside Tanzania, which Acacia Mining began exploring in 2010 before being bought out by Barrick.
According to Eric Zurrin Shanta Gold CEO, Shanta has successfully operated in East Africa for nearly 20 years and this acquisition is a natural extension in terms of geographic footprint, skillset, size and mining method.
“The West Kenya acquisition is significant for Shanta Gold, creating an East African gold mining champion with realisable growth prospects and high asset quality across three attractive gold projects,” said Eric Zurrin.
Since 2010, Shanta confirmed that Acacia and Barrick had spent about $55 million in exploration, including 221,000 meters of drilling across the project. However, as a result of the new purchase agreement, Barrick will become Shanta’s fifth-largest shareholder, with a 6.4% stake. Shanta has also agreed to a 2% life of mine net smelter return royalty over a section of the exploration properties, including the Rosterman mine.
The acquisition will expand Shanta’s footprint in East Africa, where it has operated for over 20 years. It will also increase the miner’s high-quality gold resource inventory to over 3 million ounces contained gold with the prospect of future growth.
“One of Shanta’s competitive advantages is being able to operate long hole open stoping operations more efficiently than its peers, which lends itself well to the advancement of the West Kenya Project,” Eric Zurrin affirms.
The acquisition transaction requires approval from various government organisations such as the Ministry of Petroleum and Mining and the Competition Authority of Kenya (CAK) and is expected to be completed in July 2020.
Mining economy in Kenya
Gold mining proceeds in Kenya have been yielding losses and several companies have been on the brink of selling part of their mines to raise funds for operations. Maintaining the mines has also been expensive as they require constant observation to ensure they are safe and in stable condition.
UK-based Goldplat Plc stated that it would sell its Migori gold mine over accrued loses. By December 2018, the Western Kenya project made a pre-tax loss of Ksh. 592 million. However, Shanta aims at inheriting certain liabilities as it improves its scope in the mining field.
“Shanta plans to proceed with progressing a scoping study in advance of an infill drilling campaign. Subject to the exploration results, this would likely be followed by a pre-feasibility study and a definitive feasibility study,” said Shanta in statement.
