Tanzania’s largest gold producer Acacia Mining (ACA) is to buy out its joint venture partner Lonmin (LMI) on two gold exploration licences in West Kenya for $5 million. Investors like the news, sending the shares up 5.3% to 589p.
Acacia last week revealed takeover interest from Sibanye Gold (SGL:JSE) but the latter says it is no longer considering an offer.
Barrick Gold (ABX:TSE) owns 63.9% of Acacia, having spun out the business in 2010 as African Barrick Gold, and considers this stake to be ‘non-core’.
Shares in Acacia are now trading at five-year highs, hence why the market is once again speculating on Barrick may wish to sell its majority stake.
Canaccord Genuity says Acacia is simply too expensive to buy at present. ‘The only interest might come from "alternative" buyers, like the Chinese, who actually walked away from a deal in 2012, when Acacia was a lot cheaper,’ says Canaccord.
Putting takeover activity to one side, Acacia’s willingness to invest in exploration to secure future sources of gold is treated with enthusiasm by investors.
Its decision to buy out Lonmin on two licences gives it full exposure to a highly prospective land package in Kenya, including its most advanced project, the Liranda Corridor.
The miner continues to intersect high grade gold zones at the Bushiangala and Acacia prospects along the Liranda Corridor.
Acacia CEO Brad Gordon comments: ‘Our systematic approach to exploration and drill targeting, as well as taking the decision to drill deeper holes early has resulted in the potential for an exciting new discovery.’
The company is approximately 30% of the way through a 40,000 metre drilling programme to test the continuity of high grade gold mineralisation on the Acacia and Bushiangala prospects.
The programme is aiming for the calculation of an initial inferred resource by early 2017.