London-listed exploration firm Shanta Gold is eyeing three additional prospecting licences from Canadian miner Barrick Gold in the West Kenya project, once the seller receives operating approvals from the government.
Shanta took over Barrick’s Kenyan assets in 2020 at a cost of Sh1.4 billion which included rights to mine gold over a 1,161 square kilometre area straddling Kakamega, Kisumu, Siaya, and Vihiga counties.
The West Kenya project consisted of seven prospecting licences, four of which were fully owned by Barrick, covering 1,121 square kilometres.
Barrick co-owned the other three licences covering 40 square kilometres with Advance Gold Corp, on behalf of Gold Rim Exploration Kenya Limited, with stakes of 87.16 percent and 12.84 percent respectively.
In its annual report for 2021, Shanta said the purchase deal called for it to pay Barrick an additional $0.5 million (Sh59.7 million) for these three partially-owned licences once they received approvals but added that this had not materialised by the end of last year.
“Under the terms of the Share Purchase Agreement for the West Kenya Project acquisition, $500,000 (Sh59.7 million) of cash consideration is conditional on satisfaction of certain conditions relating to the company obtaining required approvals in respect of the Gold Rim Project Licences,” said Shanta in the annual report.
“These conditions had not been met as at December 31, 2021, and no amount has been recognised.”
Shanta bought the seven licences from Barrick via a cash-and-stock transaction and also agreed to pay Barrick Gold a royalty rate of two percent, based on actual gold production in the future.
The West Kenya project did not have revenues in the past two years when Shanta Gold has been spending heavily on feasibility studies to determine the full scale of gold deposits and whether to proceed to production.
The area is estimated to have resources of 1.6 million ounces of gold.
Shanta reported a net loss of $7.3 million (Sh874.7 million) in the project last year, reflecting the heavy capital expenditure it is making in the undertaking. This was nearly eight times the $947,000 (Sh113.1 million) loss recorded the year before, according to the company’s latest annual report.
Although the exploration area has a history of small-scale and informal gold mining stretching back decades and has long been a popular destination for artisanal miners hoping to strike it rich, commercially viable large-scale mining has
SOURCE: BUSINESS DAILY
