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The East African : Mar 25th 2017
40 BUSINESS TALKS HIT A SNAG Mining companies fail to strike deal on merger in Dar Endeavou≥ and Acacia we≥e expected to fo≥m a fi≥m with a ma≥ket value of $4bn By KENNEDY SENELWA Special Correspondent M ining firm Endeavour Mining Corporation has withdrawn from merger talks with Acacia Mining Plc due to a dispute over shareholder value. Sources say the merger would have created a firm with a market value of $4 billion. Endeavour withdrew from the talks last week after both parties failed to agree shareholder value. The two firms declined to com- ment on the falling out, citing a confidentiality agreement. The two firms declined to com- ment on the falling out, citing a confidentiality agreement. Acacia, which is listed on the Lon- don Stock Exchange, mines gold in Tanzania and is preparing to mine in western Kenya. Toronto Stock Exchange-listed Endeavour has a footprint in West Africa. Its market value is about $1.66 billion and Acacia which is 63.9 per cent majority owned by Barrick Gold Corporation of Canada, is valued at about $2.1 billion. A merger with Endeavour would have enabled Barrick to reduce its stake in Acacia to about 30 per cent, as the world’s leading gold producer does not consider the company a core asset. Acacia’s chief executive Brad Gor- don said the firm’s focus was on creating value for shareholders was demonstrated by successful transformation over the past three years with disciplined approach to mergers and acquisitions. “We will continue to unlock value at our operations in Tanzania, which are foundations of our business, and excited by recent discovery in Kenya as we continue the journey towards creating a pan-African mining company,” he said. Acacia’s Bulyanhulu, Buzwagi, and North Mara gold producing mines are located in north-west Tanzania. The company is the largest gold miner in Tanzania. Acacia has discovered 1.3 million ounces of gold in Liranda corridor near Kakamega town, Western Kenya. It intends to invest $12 million in 2017 on exploration activities in western Kenya with the aim of starting commercial production in 2022. The firm which has a secondary listing on Dar es Salaam Stock Exchange, early this month stopped exporting gold and copper concentrate from Tanzania after the government on March 2, banned export of unprocessed minerals. Gold and copper concentrate in 2016, amounted to 30 per cent of Acacia’s revenues. Gold and copper concentrate in 2016 generated $316 million of the group’s revenue of $1.05 billion. Acacia’s assets in Kenya and Tan- zania would have complemented Endeavour’s properties in West Africa. Acacia has a portfolio of prospecting interests in Burkina Faso and Mali in West Africa. Endeavour in January believed discussions would create shareholder value as Houndé project in Burkina Faso is billed to start gold production in the fourth quarter of The EastAfrican MARCH 25-31,2017 Civil society wants oil, gas deals made public By KENNEDY SENELWA Special Correspondent CIVIL SOCIETY organisations have asked the Kenyan government to re- lease oil, gas and mining agreements signed with private companies for public scrutiny. The push for disclosure of contents of all extractive agreements in Kenya, Tanzania and Uganda has not been successful due to confidentiality clauses in the contracts . The Kenya civil society platform on Oil and Gas (KCSPOG) has written to Energy Cabinet Secretary Charles Keter and his Mining counterpart Dan Kazungu, asking for disclosure of all signed contracts to enhance transparency and cushion the country against losses in future. “It is critical that the existing con- A gold mine in Kenya. Acacia has discovered large deposits of gold in Kenya’s Kakamega County Picture: File WHAT THE LAW SAYS Tanzania said it had not been notified of the intended merger between local miner Acacia and Endeavour Mining Corporation. Director-general of Tanzania’s Fair Competition Commission (FCC), Frederick Ringo said Acacia was required by law to inform the watchdog before making any changes this year. The firm’s mines are Agbaou and Ity in Côte d’Ivoire, Karma in Burkina Faso, Nzema in Ghana and Tabakoto in Mali. Endeavour’s chief executive offic- er Sébastien de Montessus said focus is on long-term value by advancing organic growth in its portfolio including Houndé and Ity projects in ownership. Accrding to the law, FCC must be notified of any merger or acquisition in which there is a turnover of assets in excess of $380,000. A merger can be prohibited if is likely to create or strengthen “a position of dominance” in a market. with ambitious five-year exploration plan. “We will continue to maintain a disciplined approach to business development opportunities and only enter into transactions aligned with our long-term strategic objectives that create value for shareholders,” he said. Chinese fi≥m invests $40m in mining diatomite CHINESE MINING firm Chuanshan will invest $40 million in exploration and mining of diatomite at Marigat in Kenya’s Baringo County. This will be the second of such operation in the Rift Valley, after African Diatomite Industries Ltd at Kariandusi near Gilgil town. Diatomite is used for manufacturing of paints, toothpaste, plastics and absorbents. Kenya’s Mining Cabinet Secretary Dan Ka- zungu said Chuashan was awarded mining rights in May 2015 before the government froze issuing of licences pending enactment of the Mining Act of 2016. “The Chinese firm is mobilising to start explo- ration and mining activities. The Investment will create jobs, with the government earning 5 per cent royalty of the diatomite produced,” he said. Chuanshan has rights to a 150 square kilome- tres of land for exploration and mining of diatomite. Baringo is endowed with non-metallic mineral resources like gemstones, ruby, gold and deposits of construction material. Chuanshan is expected to start production in three years 300,000 tonnes of diatomite annually for supply to the growing local and international market while exploration work is set to commence soon to increase ore resources. “Benefits associated with the project include 40m Amount of money in dollars that Chuanshan intends to invest in the mining project in Baringo County Chuanshan making return on investment with the exchequer earning revenue in form of rents and taxes, provision of raw materials for local use and export,” said Mr Kazungu. He said the company will spend money on acquisition of mining equipment, licences and pay applicable fee to county government. Local community has created Kakori Trust as a lobby for engagement with Chuanshan. The community are expect- ed to engage the company on infrastructural development and investment in education and health facilities. Mr Kazungu said Kenya’s Mining Act of 2016 was enacted to create new regulatory framework and the Mining Policy with 16 regulations are awaiting parliamentary approval to facilitate full implementation of the Act. “The Mining Act of 2016 positions Kenya to be- ing the most attractive destination by enhancing competitiveness through a stable, predictable and transparent investment climate for exploration and mining,” he said. The regulations to strengthen Kenya’s capac- ity to manage exploration and extraction are anchored on Mining Act of 2016 which came into effect on May 27 last year. The regulations include Community Develop- ment Agreement Regulations, Award of Mineral Rights by Tender Regulations, Use of Assets Regulations, Dealings in Minerals Regulations, Strategic Minerals Regulations, Employment and Training Regulations. Residents of Turkana County protest against the lack of transparency on oil revenues. Picture: File tracts are put in public domain to be reviewed to ensure terms contained therein are being followed to avoid future complications. Lack of disclosure means there is less scrutiny,” said KCSPOG co-ordinator Charles Wanguhu. Members of the coalition are Katiba Institute, Kenya Land Alliance, Kwale County Natural Resources Network and Kenya Human Rights Commission. Kenya has developed an early oil pilot oil production scheme of 2,000 barrels per day of crude before June this year. “We believe transparent disclosure of tax payments helps governments, citizens and international opinion leaders to debate how wealth from oil resources should be managed sustainably and equitably,” reads a statement on the website of Tullow Oil Plc. Tullow which has published agree- ments of contracts in Ghana said it supports disclosure but will only publish the documents with the express support and agreement of government partners. “I am writing to request for copies of the mining permits, leases, licences and contracts signed by the government with companies operating in Kenya,” said Mr Wanguhu in the letter send to Ministry of Mining. KCSPOG cited article 35 of the Constitution which allows Kenyans to seek information and requires the State to proactively publicise information that is of interest to the public.
Mar 18th 2017
Apr 1st 2017