19 February 2018

Kenya: UK Company to Survey Sh161 Billion Kakamega Gold

Acacia Mining, a British company that has been exploring for gold in Kakamega, says it has started a survey to establish commercial viability of the deposits estimated at 1.1 million ounces of the precious metal.

The announcement is a signal that the multinational could soon join Goldplat which mines the commodity in Migori.

"The updated inferred resource estimate completed for the year-end returned ... 1.044 million ounces at Isulu and for Bushiangala 126,600 ounces," Acacia said of its Kakamega sites in a trading update.

"A technical study to determine mineability of these deposits was commenced in Q4 2017."

At a total of 1.1 million ounces, the recoverable deposits are worth an estimated Sh160.8 billion based on the price of Sh137,430 per ounce on Friday.

The study comes after Acacia intensified exploration activities in western Kenya, which cost it $12.2 million (Sh1.2 billion) in the year ended December, up from $10.5 million (Sh1 billion) a year earlier.

The recent rally in gold prices is expected to encourage production around the world. The current price of about $1,360 per ounce, a 20-month high, represents a gain of 20 per cent from lows of $1,133 in December 2016.

Increased gold production will diversify the country's exports, help to fund government expenditure and shore up the local currency from dollar receipts.

Acacia, for instance, paid $143 million (Sh14.4 billion) in royalties and taxes to the Tanzania government where it has some of its largest operations.

Gold exports from Kenya have, however, been sluggish so far. Goldplat's local subsidiary Kilimapesa Gold, for instance, sold about Sh374 million worth of the precious metal in the six months ended December -- boosted by increased production at its Migori plant.

Kilimapesa's output rose 2.2 times to 2,681 ounces in the period compared to 1,190 ounces a year earlier, the multinational disclosed in regulatory filings.

The company's gold sales rose 2.4 times to 2,720 ounces from 1,093 ounces, placing the value of the commodity sold in the review period at Sh374 million.

The royalty rate the company pays to the Kenyan government was not immediately clear but miners of other commodities are paying royalties in the low single digits.

Kenya

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