Canadian miner picks TransCentury chief to its board
TransCentury chairman Zeph Mbugua (right)with the C.E.O Gachao Kiuna at a past function. Mr Mbugua has been appointed to Stockport Exploration board. Photo/File
What you need to know:
Stockport Exploration said it has raised $500,000 (Sh43 million) to fund its operations and brought on board local investors.
Kenya’s mining sector is seen as the next top foreign exchange earner if more mines and oilfields prove commercially viable.
TransCentury chairman Zeph Mbugua has been appointed to the board of a Canadian firm prospecting for gold in western Kenya following a private placement deal where Kenyan investors took an unspecified stake.
Stockport Exploration said it has raised $500,000 (Sh43 million) to fund its operations and brought on board local investors, in a move likely to help adhere to the Environment ministry’s rule of having Kenyan participation in foreign mining companies.
The company said it raised the money through a private placement that saw five million shares sold at $0.10 (Sh8.50). Stockport said the money will be used for drilling two of its four sites in Nyanza.
“This financing is believed to be the first placement of shares to local Kenyans of a foreign mineral exploration company with operations in Kenya,” said Kestrel Capital, the lead arrangers of the private placement.
Mr Mbugua is leading an independent (from TransCentury) consortium according to persons close to him who talked to the Business Daily.
“I would say that Mr Mbugua is a shareholder and the company considers his acceptance of our request to join our board a significant and valuable asset to the company,” said Stockport chief executive officer Jim Megann.
He said Mr Mbugua has brought on board insight and introduced business partners to Stockport which the miner required. Mr Mbugua is also the chairman of East African Cables, a firm owned by TransCentury.
The Nairobi Securities Exchange-listed TransCentury has been servicing the mining and energy sectors through its majority-owned firm Civicon. It owns 62 per cent of the engineering and logistics firm it acquired in 2011.
Civicon counts Tullow Oil among its major clients and analysts say the division will boost TransCentury’s revenues in tandem with the increase in exploration activity.
Kenya’s mining sector is seen as the next top foreign exchange earner if more mines and oilfields prove commercially viable.
Stockport said exploration in Nyanza is still in its early stages and with drilling yet to start, it could not estimate how much wealth lies underground.
“We still have a little bit of analysis of geophysical data prior to commencing drilling, but actual work is not that far into the future,” said Mr Megann in an e-mail response.
He added that mining areas in Canada which are geologically similar to Lake Victoria have proven viable with operations running for more than 150 years. If the Nyanza sites prove viable, the region will be a major destination for investments, he said.
Apart from the new law meant to curb wholesale repatriation of mineral wealth requiring foreign mining companies to cede at least 35 per cent of their shares to Kenyans, the industry is also facing new taxes.
The government introduced withholding tax where non-resident firms pay a 20 per cent tax rate on proceeds from the transfer of shares or property. Resident firms will pay a 10 per cent rate.
“This withholding tax ignores the investment required to unlock the value being taxed and will still tax companies who have made a substantial loss on exploration and who sell their project to another company who wants to take it on,” Base Resources chief executive Tim Carstens told the Business Daily.
The tax is aimed at helping Kenya to plug the budget deficit created by shortfall of tax revenue and benefit locals.
