Capital Markets

Shanta outlines Sh17.5bn capex in Western Kenya gold mine

gold

Artisanal gold miners in Kakamega County.FILE PHOTO | NMG

Guernsey-incorporated Shanta Gold plans to invest Sh17.5 billion ($161 million) in pre-production capital expenditure in its gold mining activity in western Kenya.

The firm said it expects the mine in the Lirhanda corridor— a 1,161 square kilometre area that straddles Kakamega, Kisumu, Siaya and Vihiga counties —to have a productive life of nine years should it be confirmed to be economically viable.

"The West Kenya Project Scoping Study has resulted in attractive project economics. As with all Scoping Studies there is a significant amount of work to be completed before the assumptions can be confirmed," said Shanta Gold chief executive Eric Zurrin in a statement.

“Shanta (will) undertake infill drilling and technical studies over the next 24-36 months to determine the economic viability of a potential mining operation. Moreover, should the economic viability of a mine be confirmed, the Scoping Study estimates pre-production capital investment of $161 million will be required from Shanta prior to first gold production.”

The bulk of the pre-production capex will be spent in processing, at Sh6.85 billion ($63 million) and mining work at Sh5.88 billion ($54 million).

Infrastructure works will take up Sh3.48 billion ($32 million) while Sh1.31 billion ($12 million) has been earmarked for other expenses.

Shanta earlier this year acquired the seven gold mining licences from Canadian miner Barrick Gold Corporation in a cash-and-stock transaction worth a total of $14.5 million (Sh1.58 billion).

The local unit, known as Acacia Exploration (Kenya) Ltd, was originally owned by Acacia Mining before being sold to Barrick Gold Corp.