What you need to know:
- Barrick announced in a press release on Wednesday that it has received $6.5 million of the total cash consideration, with $0.5 million remaining.
- The company added that it also received 54,650,211 shares in Shanta Gold and a two per cent NSR royalty relating to the project.
That residents of parts of western Kenya are literally sitting on billions of shillings in gold deposits became evident on Wednesday when a British company said it has acquired a firm that is prospecting for the mineral in the Lirhanda corridor.
Tanzania-based Shanta Gold Ltd acquired the project from Acacia Exploration (Kenya) Ltd that was originally owned by Acacia Mining before being sold to Barrick Gold Corp.
Barrick announced in a press release on Wednesday that it has received $6.5 million of the total cash consideration, with $0.5 million remaining.
The company added that it also received 54,650,211 shares in Shanta Gold and a two per cent NSR royalty relating to the project.
The deal was concluded with Shanta Gold acquiring 100 per cent shares of the Barrick owned gold mining subsidiary, which has been handling the Lihranda corridor Gold Exploration project, estimated to hold 1.31 million ounces of inferred gold.
1,600 square kilometres
The Lihranda corridor, covering 30-square kilometres with a land package of approximately 1,600 square kilometres is among the key projects leaders are focused on in the region’s development agenda.
Gold reserves have been found in the Lirhanda corridor that stretches from Kakamega, Vihiga, parts of Kisumu to Siaya counties.
The gold has been described to be of high grade.
Acacia, which held seven prospecting licences for the projects, had been prospecting since 2012 but was yet to embark on actual mining, which was projected to start in 2022.
While touring the region early last month, Mining Cabinet Secretary John Munyes announced the exploration plans and formally received the five acres where a gold refinery will be established.
Western Kenya leaders recently questioned the terms of the government deal with Acacia, saying it is shrouded in secrecy.
“We want to know who the exploration company’s local representatives are, the tendering, mining methods and environmental impact assessment reports,” Amani National Congress leader Musalia Mudavadi and his Ford Kenya counterpart Moses Wetang’ula said in a July letter to Mr Munyes.
Sabatia MP Alfred Agoi took the matter to the National Assembly, demanding details of the deal.
Interestingly, Mr Munyes was scheduled to give his response on Mr Agoi's statement in Parliament yesterday, but the MP said it has been pushed to a later date to allow the minister draft proper responses.
Shanta Gold had announced earlier that it intended to acquire 100 per cent shares of Acacia, which includes the promising Western Kenya project.
Shanta Gold, whose flagship asset in Tanzania is the New Luika Gold Mine (New Luika), announced on Wednesday that it had received the necessary regulatory approvals in Kenya, including standard consent from mining authorities to the assignment of interests and the transfer of prospecting licences.
Closing the deal
The transaction has also been approved by the Competition Authority of Kenya, closing the deal.
The purchase entails $7.0 million cash (inclusive of $0.5 million, which may become payable post-completion, subject to satisfaction of a condition subsequent), $7.5 million shares in Shanta Gold Ltd issued to Barrick (issued at 10.5p per share) and a two per cent life of mine net smelter return (NSR) royalty over the project.
Consequently, some 54,650,211 shares in Shanta Gold were issued to Barrick on Wednesday, resulting in a pro forma interest of 6.4 per cent in Shanta Gold.
Shanta Gold chief executive Eric Zurrin was upbeat about the acquisition, terming the Western Kenya venture as significant for the company.
“The West Kenya acquisition is significant for Shanta Gold, creating an East African mining champion with realisable growth prospects and high asset quality across three attractive projects,” he said in a statement shared on www.shantagold.com.
With the conclusion of the deal, Shanta Gold is expected to turn focus on integrating the Lihranda corridor hold prospecting venture into the Shanta portfolio.
The CEO said focus shifts on accelerating progress on the ground with plans to begin infill drilling and to further delineate the resource potential.
“We are committed to responsibly investing in Kenya and working with the government, communities and local stakeholders,” he said.