Caracal Gold PLC (LSE:GCAT) said it agreed to buy the advanced Nyakafuru gold project and secure a 75% interest in the Simba gold project, both in the world-class Lake Victoria Gold Fields in Tanzania.
Caracal’s attributable gold resources will increase to more than 1.5 million ounces as a result of the acquisitions.
It will buy the interests for US$3.75mln, consisting of US$775,000 in cash on settlement and the remaining US$3.0mln in shares. Further payments are due once key development milestones have been met.
The overall cost of the interests is US$5.95 per resource ounce, well below typical gold exploration company valuations of between US$25 and US$50 per resource ounce, Caracal said.
The projects extend over 350 km2 and include 26 granted mining and prospecting licenses and five existing license applications in one of Africa's largest gold producing regions.
"We are committed to Kenya and the broader East Africa region and as one of the largest gold producing countries in Africa, Tanzania offers many exciting opportunities,” said Caracal chief executive Robbie McCrae.
“We are therefore delighted to have been able to proceed and sign formal agreements on the Nyakafuru and Simba gold projects, which have proven high-grade shallow gold resource and historical mining and development studies, that will allow us to accelerate their developments."
Nyakafuru has proven high-grade shallow gold resources contained within four deposits and an existing JORC-compliant gold resource of 0.7 million ounces, with the potential to grow to 1.1 million ounces on the successful granting of existing mining and prospecting application.
"Located just 25km north-east of Nyakafuru, the Simba project is also an exciting gold project with a JORC resource of 320,000ozs with all indications that there is a very broad and shallow gold system with the potential for multiple parallel lodes,” said McCrae. “We are hoping therefore to incorporate Simba into the broader Nyakafuru development."
The acquisitions are in line with the company's growth strategy of establishing itself as a major gold player in East Africa.