A gold mine in Tanzania: Discovery of large deposits in Kenya is attracting more foreign firms. File
What you need to know:
Aviva (K) Limited holds a number of prospecting businesses in Nyanza and Western province where bigger reserves of gold have recently been found.
The discovery of large reserves of gold in Kenya continues to attract foreign interest with several giant international mining firms
In 2010, Kenya earned Sh6.2 billion from the sale of two tonnes of gold, three times higher than the year before
Shareholders of Australia-based Aviva Corporation Limited have approved the sale of a Kenyan gold mining business to a Canadian rival amid growing foreign interest in the country’s prospecting sector.
The Australian Securities Exchange (ASX)-listed firm said Tuesday its shareholders had given green light to sell stakes in its Kenyan subsidiary, Aviva Mining (Kenya) Limited to Africa Barrick Gold (ABG).
Aviva (K) Limited holds a number of prospecting businesses in Nyanza and Western province where bigger reserves of gold have recently been found.
“The directors of Aviva Corporation Limited wish to advise that at the general meeting held today (yesterday) the members approved the resolution as set out in the notice of the general meeting on August 6, 2012 on a show of hands,” the company secretary Stef Weber said in statement to the ASX in reference to an earlier notice on the planned sale.
The discovery of large reserves of gold in Kenya continues to attract foreign interest with several giant international mining firms either moving to grow their output or buy into existing businesses.
ABG last month said it had lined up a Sh2.67 billion acquisition of a prospecting business owned by Aviva Limited in western Kenya. It said the planned acquisition would hand it a 51 per cent stake that Aviva Mining (K) currently holds in a joint venture with Lonmin Plc. The deal would also hand ABG access to Aviva Mining’s right to earn up to 75 per cent interest in a second joint venture with Advanced Gold Corporation.
The principal assets of the current joint venture between Aviva and Lonmin Plc are two special licences-SL123 and SL213- located in Nyanza province’s Ndori and Siaya, respectively. The second joint venture between Aviva and Advanced Gold has three main assets –SL265, SL266 and L267-in Western province’s Bukura, Sigalagala and Rosterman, respectively.
As part of the deal, ABG plans to offer Aviva an initial cash consideration of Sh1.73 billion (A$20 million) and an additional Sh867.6 million (A$10 million) once it is offered an instrument confirming the existence of the indicated three million ounces of gold on the targeted mines. ABG has also accepted to provide an additional Sh86.7 million (A$1 million) to Aviva (K) to cover the cost of an agreed exploration programme from June 1, 2012 until when the transaction closes.
Aviva said the deal would boost its cash reserves and help pursue coal projects it has lined up in Botswana.
Analysts said the acquisition would help ABG deal with uncertainties in the Tanzania market in the wake of tighter tax policies being pushed by the government. The Tanzanian government is pushing to have mining companies operating within its borders for more than five years to start paying a corporate tax of 30 per cent, citing rising prices of precious metals at the world market.
This uncertainty is anticipated to drive further acquisition and expansion outside Tanzania by ABG and other firms.
Major gold mining companies in Tanzania include African Barrick Gold Plc, which has four gold-producing mines, AngloGold Ashanti Ltd and Resolute Mining Ltd.
Statistics showed that in 2010, Kenya earned Sh6.2 billion from the sale of two tonnes of gold, three times higher than the year before an indication of how fast the commodity is gaining prominence as an export product.
