London AIM-listed East Africa-focused gold producer Shanta Gold plans to complete acquisition of Canadian miner Barrick Gold's assets in Kenya by June.
The firm says it will consequently move to fast-track gold production in Kenya once it completes the transaction.
The Canadian miner Barrick Gold Corporation announced early this year it was selling its seven Western Kenya gold mining licences to the Guernsey-incorporated Shanta Gold in a cash-and-stock transaction worth a total of $14.5 million (Sh1.4 billion).
“The company's acquisition of Barrick Gold's assets in Kenya is expected to conclude in mid-2020…Shanta is focused on unlocking value and progressing the project,” said the buyer in a statement.
The company says the western project has one of the highest grading gold deposits in Africa.
“The West Kenya project has an inferred mineral resource estimate of 1.1 million ounces, grading 12.6g/t gold,” it said.
Shanta also plans to establish a centre of excellence at the New Luika Gold Mine to boost the western project and revamp its staff capacity in Kisumu.
“Shanta is one of the lowest cost practitioners of long-hole open-stopping underground mining, the expected mining method for the West Kenya Project,” it said. “The scoping study will be progressed in 2020." Toronto-based Barrick holds licences for rights to mine gold over a 1,161 square kilometre area that straddles Kakamega, Kisumu, Siaya and Vihiga counties. The area has gold deposits estimated at 1.1 million ounces, with a current market value of Sh186 billion.
Under the deal, 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). This will see Barrick become the fifth largest shareholder in Shanta.
Shanta has also agreed to pay Barrick a two percent royalty rate, based on actual gold production in the future.
“The West Kenya acquisition is significant for Shanta Gold, creating an East African gold mining champion with realisable growth prospects and high asset quality across three attractive gold projects," Shanta CEO Eric Zurrin said in February.