(Alliance News) - Shanta Gold Ltd on Monday announced the purchase of gold projects in East Africa from Canadian mining giant Barrick Gold Corp.
Shanta has purchased Barrick subsidiary Acacia Exploration Kenya Ltd, whose main asset is the West Kenya project. Acacia Exploration Kenya is part of Acacia Mining, which was on the London Stock Exchange until its takeover by parent Barrick last year.
Shanta is paying USD7 million in cash to Barrick and USD7.5 million in shares, as well as a 2% life-of-mine net smelter return royalty. Barrick will become Shanta's fifth-biggest shareholder, with a 6.4% stake.
The project, Shanta said, is one of the highest-grade gold projects in Africa, and gives the company a "major" presence in a geologically rich and under-explored gold region.
The West Kenya project has an inferred mineral resource of 1.2 million ounces of gold, at a grade of 12.6 grams of gold per tonne of ore. It covers 1,161 square metres on the Lake Victoria goldfield in north-western Tanzania and south-western Kenya.
Acacia's North Mara gold mine is nearby, as is South African miner AngloGold Ashanti Ltd's Geita mine.
Shanta said some USD55 million worth of exploration has taken place since 2010 at West Kenya. The Rosterman mine, which is within the West Kenya licence area, produced 259,000 ounces of gold in the past.
"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," commented Shanta Chief Executive Eric Zurrin.
"Shanta has successfully operated in East Africa for nearly 20 years and this acquisition is a natural extension in terms of geographic footprint, skillset, size and mining method.
"One of Shanta's competitive advantages is being able to operate long hole open stoping operations more efficiently than its peers which lends itself well to the advancement of the West Kenya project," he added.
Shanta shares were 2.1% higher in early trade on Monday in London at a price of 11.26 pence each.
By George Collard; georgecollard@alliancenews.com
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