Markets & Finance

Canada’s Stockport set to begin gold mining in Western Kenya

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TransCentury chairman Zeph Mbugua. Photo/FILE

Stockport Exploration, a Canadian firm prospecting for gold in Western Kenya, will begin mining operations at a cost of Sh74 million, part of the cash raised from local investors.

The firm that is mining in Migori raised $1.15 million (Sh100 million) through a private share placement in October 2013 that saw TransCentury chairman Zeph Mbugua appointed to its board.

Kestrel Capital was the transaction adviser in the deal.

Stockport said that extraction would now begin after it completed analysis, which was the first phase of its mining programme.

“Based on results from Phase 1, a Phase 2 programme will be undertaken to meet the remaining requirements for establishing a small-scale mining operation,” said Stockport in a statement.

The miner said that the second phase would see it begin to look for companies to offer services.

“Phase 2 of the programme will include finalising the agreement with a service provider to procure equipment and provide managerial services, process tailings and quartz rubble, and use a sophisticated small-scale mining operation at the SPL 214 target (its site) to fund ongoing exploration expenditures,” said the firm.

Stockport expects that it will begin to make revenues from its operations by the end of this year.

Stockport joins other mining firms that have raised capital for expanding operations and improving working capital in the western part of the country.

READ: Miner to list on the NSE as it seeks exploration funds

UK firm Red Rock Resources raised Sh71 million through a bond to fund operations for its sites also in Migori County. African Queen Mines of Canada also seeks to raise Sh8 million for its operations in Homa Bay and Siaya.

Stockport also joins Base Resources, the Australian firm mining titanium in Kwale County, as miners that have sold shares to local investors.

In June last year, Base Resources announced that local, large institutional investors that included pension and asset managers had bought a one per cent stake in the miner for Sh170 million.

Analysts say that local businesses stand to benefit as more mining firms increase their operations.

“The construction of new mines across the region to exploit the rich set of natural resources in a historically underexplored region requires local engineering and construction capacity where TransCentury fits into,” said a report on the infrastructure firm by Old Mutual Securities.

Migori was in the news this week after a firm was caught exporting 200 tonnes of copper ore, highlighting the difficulty the country faces in policing miners as well as the existence of untapped mineral wealth.

Until Base set up in Kwale, Kenya had no large-scale mining experience unlike neighbouring Tanzania.