Barrick sells Kenya project to Shanta Gold for $14.5 million

Barrick Gold (TSX: ABX) (NYSE: GOLD) has sold its project in southwestern Kenya, held by its former subsidiary Acacia Mining, to Tanzania-focused Shanta Gold in a $14. 5-million deal.

The cash and shares transaction gives Shanta its first asset outside Tanzania, which Acacia began exploring in 2010 before being bought out by Barrick.

Acacia and previous owners had spent about $55m in exploration, including 221,000 metres of drilling across the project since 2010

The West Kenya licence holds about 1.18 million ounces of gold with a grade of 12.6 grams per tonne (g/t). Historical gold production in the area is estimated at roughly 259,000 ounces of gold at 12.3 g/t, mainly from Rosterman mine, included in the licence area of the West Kenya Project.

Acacia and previous owners had spent about $55 million in exploration, including 221,000 metres of drilling across the project since 2010, Shanta said.

Barrick will become Shanta’s fifth-largest shareholder, with a 6.4% stake, as a result of the agreement.

Shanta has also agreed to a 2% life of mine net smelter return royalty over a section of the exploration properties, including the Rosterman mine.

“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,” the company’s chief executive, Eric Zurrin, said in a statement.

The acquisition will expand Shanta’s footprint in East Africa, where it has operated for over 20 years. It will also increase the miner’s high-quality gold resource inventory to over 3 million ounces contained gold with the prospect of future growth.