Kenya: Warren Buffett Misses Out On a Stake in Kenya’s Gold

A gold mine

Shanta Gold has completed the acquisition of Canadian miner Barrick Gold’s assets in Kenya at a cost of Sh1.4 billion.

20th August 2020

By Kimani Chege

American multinational holding company Berkshire Hathaway, owned by Warren Buffett last week announced the acquisition of a certain percentage of Canadian gold mining company, Barrick Gold.

The deal saw the shares of Barrick Gold soar by 12% after Warren Buffett’s firm bought a stake in the company. Berkshire Hathaway purchased a 20.9 million-share stake in Barrick Gold, valued at about $564m.

However, as this deal was being announced, another deal was being activated in East Africa. Shanta Gold, the London AIM-listed miner announced that it has completed the acquisition of Canadian miner Barrick Gold’s assets in Kenya at a cost of Sh1.4 billion from three subsidiaries of Barrick.

The three subsidiaries include Acacia Exploration (Kenya) Ltd. Approximately US$55 m invested in exploration activities across West Kenya since 2010 by Acacia Mining Plc and previous owners.

Acacia joined the Kenyan market in 2012 after acquiring Aviva Mining Kenya Ltd. It acquired 51 percent interest in a joint venture with Lonmin Plc, and Aviva’s right to earn an initial 75 percent interest in a joint venture with Advance Gold Corporation. In 2016, Acacia acquired the remaining 49 percent of the Lonmin joint venture from a subsidiary of Lonmin for $5 million.

Eric Zurrin, Chief Executive Officer said with the receipt of regulatory approvals in Kenya, including standard consents from the Mining Authorities to the assignment of interests and the transfer of Prospecting Licences, and approval of the Transaction by the Competition Authority of Kenya, all of the closing conditions for the Transaction are now satisfied.

“The West Kenya acquisition is significant for Shanta Gold, creating an East African gold mining champion with realizable growth prospects and high asset quality across three attractive gold projects.”

He added, “Now that the Transaction is complete, we are turning our focus to integrating West Kenya into the Shanta portfolio and accelerating progress on the ground with plans to begin infill drilling and to further delineate the resource potential. We are committed to responsibly investing in Kenya and workiing with the Government, communities, and local stakeholders.”

The purchase consideration is comprised of US$7.0 million cash, US$7.5 million shares in Shanta Gold Limited issued to Barrick (issued at 10.5p per share), and a two percent life of mine net smelter return (NSR) royalty over the Project. Accordingly, 54,650,211 shares in Shanta Gold have today been issued to Barrick resulting in a pro forma interest of 6.4% in Shanta Gold, a statement from the company said.

The Project lies within western Kenya, 350km northwest of Nairobi, and 25km northwest of Kisumu, on the edge of Lake Victoria. The West Kenya Project straddles the Kakamega, Kisumu, Siaya, and Vihiga Counties and comprises a total of 7 Prospecting Licences covering 1,161 sq km.


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