London-based mining firm Goldplat Plc says it expects to cede to local investors a 10 per cent stake of its Kenyan subsidiary Kilimapesa Gold (Pty) in the coming years.
The announcement comes in the wake of government plans to take part ownership in local mining firms.
The Mining Act 2016 gives the minister for Mining discretion to define the size of mining firms that will subsequently be required to float at least 20 per cent of their shares on the Nairobi Securities Exchange (NSE) within three years after launch of operations.
Goldplat recently told its shareholders that it anticipates ceding 10 per cent equity to local investors, indicating that the multinational is already preparing for the new law.
The firm did not, however, respond to our queries on why it foresees a surrender of a 10 per cent stake only.
“It is our understanding that only 10 per cent will apply to Kilimapesa. Discussions with the Chamber of Mines have taken place and are ongoing,” the multinational told shareholders.
Goldplat CEO Gerard Kisbey-Green said he could not respond immediately to our queries on the matter.
The law says the Mining minister will define the size of capital outlays by companies which will require them to cede ownership to local investors through the stock market.
Goldplat has increased its investment in the loss-making Kilimapesa operation in the past one year, signalling its confidence in gold’s future prospects. The price of gold touched highs of $1,833 (Sh188,800) per ounce in September 2011 as investors rushed to buy the commodity in the aftermath of the global financial crisis, which eroded the value of currency-based assets.
Its price subsequently dropped to trade at the current $1,285 (Sh132,300) per ounce as fears of recession subsided.
Goldplat spent £157,000 (Sh21.5 million) to increase production capacity at Kilimapesa in the year ended June, up from £110,000 (Sh15 million) he previous year.
The mine produced 106 kilos of gold in the review period compared to 62 kilos the year before, with unit sales rising to 100 kilos from 62 kilos.
Kilimapesa’s net loss widened to £1.1 million (Sh150 million) from £711,000 (Sh97.4 million). Goldplat says Kilimapesa became profitable at the tail end of the review period.