UK gold producer halts Kenya expansion plan over mining rules

By John Oyuke

United Kingdom-based gold producer Goldplat has suspended expansion programme at its Kilimapesa gold mine in Kenya.

The London Stock Exchange listed firm said its directors had delayed the planned plant expansion at the gold mine due to what it called continued uncertainty regarding mining legislation in Kenya and operational difficulties at the mine. The Africa-focussed mining company commenced production at Kilimapesa in Trans Mara in the second half of 2008 and poured its first gold in January 2012 – that was Kenya’s first gold mine to be commissioned since independence in 1963.

The firm’s Chief Executive, Russell Lamming described the delays in the plant expansion and subsequent losses at Kilimapesa as disappointing.

“However we are confident that our continued discussions with the Kenyan government will result in a favourable outcome, and we look forward to a strong second half of the year,” he said in a statement.

According to the firm’s trading update, lack of processing capacity and subsequent increase in operational cost resulted in losses being incurred at Kilimapesa during the first half of the company’s current fiscal year.

Local shareholding

Lamming however expressed confidence a favourable outcome from engagement with government would enable the planned plant expansion at Kilimapesa to commence and restore operations to profitability.

The quest for robust mining sector in Kenya hit an anti-climax towards towards the end of last year following sudden incorporation of new regulatory measures including requirement that foreign mining firms cede 35 per cent shareholding to locals.

The announcement by Environment and mineral resources minister Ali Chirau Mwakwere sent a number of companies already on the ground into panic. The new law took effect from September 27, 2012.