Shanta Gold to acquire Kenya assets from Barrick Gold

East Africa-focussed gold producer Shanta Gold has entered into a definitive agreement under which it will purchase 100% of the shares of Acacia Exploration Kenya (AEKL) from two subsidiaries of Barrick Gold Corporation.

The AIM-traded firm said AEKL's primary asset is a 100% participating interest in licences held by Afriore, which includes an existing high-grade resource.

It highlighted a NI-43101 compliant inferred mineral resource estimate of 1,182,000 ounces of gold, grading at 12.6 grams per tonne, which was believed to be one of the highest grading gold deposits of at least one million ounces in Africa.

The project covers 1,161 square kilometres within the Lake Victoria greenstone gold field in north west Tanzania and south west Kenya, which consists of global Tier 1 assets, including North Mara and the Geita Gold Mine.

It said the project required in-fill drilling and technical studies before a construction decision was made.

Around $55m had been invested in exploration activities across west Kenya since 2010 by Acacia Mining and previous owners.

Exploration drilling of 221,000 metres, around 80,000 soil samples, and regional intellectual property had identified “attractive” exploration targets, the board said.

It pointed out historic gold production of around 259,000 ounces at 12.3 grams per tonne from the Rosterman mine, which is included in the licence area of the West Kenya Project.

The fully-financed purchase price totalled $7m in cash, $7.5m in shares in Shanta Gold issued to Barrick, and a 2% life-of-mine net smelter return royalty over the project.

Barrick would become Shanta Gold's fifth largest shareholder with a 6.4% interest as a result.

“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,” said chief executive officer 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.”

At 1459 GMT, shares in Shanta Gold were up 1.69% at 11.21p.