Shanta Gold Ltd. agreed to purchase Barrick Gold Corp.'s West Kenya gold project for US$7 million cash, US$7.5 million in shares and a 2% life-of-mine net smelter return royalty payable on actual future gold production.
Shanta also agreed to take on the project's cash liabilities, expected to total up to US$4 million, according to a Feb. 10 release.
Former Barrick unit Acacia Mining PLC and other previous owners have spent US$55 million on exploration at the West Kenya project since 2010.
The project covers 1,161 square kilometers and hosts a National Instrument 43-101-compliant inferred mineral resource of 2.9 million tonnes with a mean gold grade of 12.6 g/t containing about 1.2 million ounces within the Isulu and Bushiangala prospects. The 2018 resource estimate used a cutoff grade of 2 g/t for Isulu and 7 g/t for Bushiangala.
Barrick will become Shanta Gold's fifth-largest shareholder, with a 6.4% interest, as a result of the transaction.
When the deal is complete, expected around mid-2020, Shanta plans to proceed with a scoping study before starting an infill drilling campaign.
The company said additional work to delineate the size of the orebody, update the mineral resource estimate and proceed to a construction decision could take up to 36 months.