Sh164bn gold project kicks up a storm
What you need to know:
- Shanta Gold has already secured seven licences for 1,161 square kilometres of land, which is estimated to hold 1.31 million ounces of inferred gold resources worth Sh164 billion.
- Mr Zurin says once the viability of the project has been ascertained, investments will be expected to flow in from international funders.
Controversy is brewing over the Sh164 billion gold prospecting project in the Lirhanda Corridor of western Kenya, with residents demanding details of contracts signed between the government and Shanta Gold, a UK firm with vast mining operations in Tanzania.
Through their leaders, the residents of the expansive gold belt that straddles Kakamega, Vihiga, Kisumu and Siaya counties want to know what they stand to gain from the project.
Shanta Gold, which is AIM-listed in London, recently announced that Busia and Kakamega counties could be sitting on high-grade gold deposits on a scale only comparable to the great Abitibi Gold belt, which stretches from Wawa in Ontario to Val d'Or in Quebec, Canada.
Shanta Gold has already secured seven licences for 1,161 square kilometres of land, which is estimated to hold 1.31 million ounces of inferred gold resources worth Sh164 billion. Once the economic viability of the project is ascertained, the firm says Lirhanda Corridor could join the list of the richest gold belts in Africa. But Shanta Gold CEO Eric Zurin said the West Kenya project is in the exploration phase and there is as yet no certainty that mining will ever take place.
When the company announced the discovery, Mr Zurin said: “We believe the Busia-Kakamega region has the potential to host a number of large, high-grade deposits similar to the adjoining belt in Tanzania, which hosts world-class deposits, including AngloGold's Geita gold mine and Barrick's North Mara gold mine.” Shanta Gold is well-established in Tanzania, where it owns the New Luika Gold Mine in the Lupa Gold Field of south-western Tanzania.
Acacia Exploration Kenya
Earlier this year, Shanta Gold acquired licences from Acacia Exploration Kenya, a subsidiary of UK-based Barrick Gold. The licences were handed over to Shanta Gold after a $7 million (Sh700 million) cash payment was made and US$7.5 million (Sh750 million) worth of Shanta shares issued to Barrick Gold.
Mr Zurin says once the viability of the project has been ascertained, investments will be expected to flow in from international funders. The residents, however, want the fine print of the deal with Shanta Gold clarified first.
“How will the residents benefit? We need to be clear on how royalties will be ploughed back to the community and we need that information now,” said 92-year-old Philip Nabwasu, who represents faith-based organisations on the project’s committee.
The Mining Act 2016 requires the holder of a mineral mining right to pay royalty fees to the state in respect of the various mineral classes extracted. Section 183 of the Act provides that the royalty fees payable should be distributed as follows: 70 per cent to the national government, 20 per cent to the county government and 10 per cent to the local community.
In July, Amani National Congress leader Musalia Mudavadi and Ford Kenya's Moses Wetang'ula sought to understand the dealings behind the planned exploration. In a letter to Mining Cabinet Secretary John Munyes, Mr Wetang’ula and Mr Mudavadi demanded full disclosure of details of the venture.
“We want to know who the exploration company’s local representatives are, the tendering process, mining methods and environmental impact assessment reports,” Mr Mudavadi and Mr Wetang’ula said. In the same month, Sabatia MP Alfred Agoi escalated the quest for clarity on the project to the National Assembly.
Unknown to him then, the project was actually in the process of changing hands from Acacia to Shanta Gold. The acquisition was completed three weeks ago, even before the MP’s questions were responded to. Acacia, which held seven licences, had been prospecting for gold in the region since 2012 and had projected to start mining in 2022. It sold its stake to Shanta Gold, which had in turn taken over from Aviva Mining Corp’s joint venture with Afri Ore.
Mr Jimmi Makotsi, who represents artisanal miners on the community committee, said the project would only be meaningful to the communities in the gold belt when they start drawing royalties.
Since the mining venture was announced, the cost of land on the Lihranda corridor has shot up from about Sh350,000 to over Sh1million for an acre.
The first signs of resistance appeared when Acacia started drilling without involving or consulting the local Idakho community in Ikolomani constituency.
A community committee has since been set up, which regularly engages the prospectors on progress made in the venture. But residents feel some segments of the community are not represented.
During his recent visit to the region, Mr Munyes urged residents to support the project. The Lirhanda Corridor project covers 30 square kilometres and has a land package of approximately 1,600 square kilometres.