Barrick Gold Corporation, a Canadian miner is selling its seven Western Kenya gold mining licenses to Guernsey-incorporated Shanta Gold in a cash-and-stock transaction worth Sh1.4 billion. The firm controls over a 1,161 square kilometer area that straddles Kakamega, Kisumu, Siaya and Vihiga counties.
Barrick will take $7 million (Sh700 million) in cash and a 6.4 percent stake or 54.6 million shares of Shanta valued at $7.5 million (Sh753 million). The area of control has gold deposits estimated at 1.1 million ounces, with a current market value of Sh186 billion.
“The West Kenya acquisition is significant for Shanta Gold, creating an East African gold mining champion with realizable growth prospects and high asset quality across three attractive gold projects. 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,” Shanta CEO Eric Zurrin said in a statement.
Ministry of Petroleum and Mining and the Competition Authority of Kenya (CAK) are yet to approve the deal. The now sold Western Kenya project made a pre-tax loss of Sh592 million. Gross assets in the same period stood at Sh1 billion.
“Immediately upon completion of the transaction, Shanta’s team will move to the site to complete the data handover. 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.”
London-based Goldplat Plc said it was ready to sell its Migori gold mine as its bid to raise new funds to run the loss-making operations.
“We remain committed to our strategy of increasing long-term visibility of earnings in the recovery businesses through key initiatives and finding an investment partner or buyer for Kilimapesa,” the firm said in its trading update for six months to December 2019.
The firm reported that operating losses at KPG more than halved to Sh38.8 million (£295,000) in six months to December 2019, down from Sh90.5 million (£686,845) a year earlier. During the six-month period, the Kenya Revenue Authority gave the firm Sh68.8 million (£523,000) in VAT refunds. Massive job losses are expected after the deal is done.
