Acacia Mining strikes gold in Kenya

Acacia Mining has struck gold in Kenya, reporting the discovery of a “multi-million ounce” gold stream in the western part of the country.

FTSE 250-listed Acacia said initial tests suggested the find was “one of the highest grade projects in Africa today” and the first step in defining a gold-rich corridor in the east African country.

Acacia reported a resource of 1.31 million ounces at 12.1 grams per tonne, totalling 1.3m ounces of gold. However it expects further drilling work to revise this up to at least 2m ounces by the end of the year.

The company has six drill rigs on site and plans to spend $12m (£9.7m) this year on further exploring its Kenyan prospect.

Brad Gordon, chief executive, said the company was “delighted” with the result so far.

“Whilst Kenya is a relatively new mining destination we are very pleased with the relationships we have built and the support we have received and look forward to working closely with all stakeholders as we progress this highly promising project,” he added.

Dan Kazungu, Kenya’s cabinet secretary for mining, said that the country was seeking to ratify its Mining Act to establish as “a robust legislative framework” to support its burgeoning mining industry.

Acacia

“We are excited about the potential of Acacia’s West Kenya Project, as it could ultimately lead to the creation of a gold mining industry that would have a benefit to our country, economy and people,” he said. “We look forward to continuing to work with Acacia and welcome their continued interest and investment in Kenya.”

Acacia has three operating mines in Tanzania, but has made no secret of its ambition to become a pan-African miner. It has further exploration projects in that country as well as in Burkina Faso and Mali. Mr Gordon has described the company’s approach as “contrarian”, because it has continued to invest in hunting for new gold deposits while many of its rivals have pared back budgets.

The company is in early-stage merger talks with Endeavour Mining of Canada, a deal that may win the backing of Acacia’s largest shareholder, Barrick Gold, which has been seeking to offload its 64pc stake.

In its full-year results, released earlier this month, Acacia swung from a $124m (£99m) pre-tax loss to a $242m profit on revenue up 21p, and more than doubled its full-year dividend.

Acacia shares were little changed at 536p.