Kilimapesa has commissioned stage one of a new processing facility at its gold mine in Kenya.
Kilimapesa was the first gold mine to be commissioned after independence. What have been the key developments over the years?
Exploration began in 2007. The initial area of interest was originally licensed to a company called Sebimu and, as they were also looking for investors and partners, we reached an agreement in which we attained part of the license. We then acquired an exploration license and carried out a detailed drilling program, analyzed the results, and realized we had gold potential. The confirmed resource was close to 700,000 ounces. We then selected another area and acquired the license in 2011. We were very grateful to the government, as this was the first license to be issued for gold mining since Kenya’s independence.
We went into production immediately, upgrading the facility that was there. The gold price has been a major challenge and we had to reduce staff numbers over the years. For a period, the operations were put under care and maintenance. However, we are now out of that, and the gold prices are looking up. Our production is still relatively low, producing between five and ten kilograms of gold every month, but last year we decided to expand the company. This expansion is currently underway with the objective to crush around 3,000 tons of ore every month. This is a huge step up, and our long-term target is to crush around 6,000 tons per month. Some of the required equipment has been mobilized from Ghana. We hope that by December the new plant will be fully operational.
Goldplat also has operations in Ghana and South Africa. How does Kenya’s business environment compare, particularly with regard to investor support?
Here in Kenya we have had great support from the government, and the new Mining Act is also very positive. Speaking on behalf of the Kenya Chamber of Mines, we have been pushing for a new law for some time, because the previous act was established in the 1940s under very different circumstances. It had become obsolete and very difficult to implement, particularly as it was put together under a different constitutional order. The new Mining Act takes into account the new constitution, and also places more emphasis on local communities.
What are the most important factors to consider when establishing a cooperative relationship with local communities?
The private sector generally wants to have a peaceful coexistence with local communities. The new law addresses these issues and we, the Kenya Chamber of Mines, are working with the industry to prepare the new regulations. This will give clarity to the relationship and how the two should relate. Mining communities have an inherent attachment to natural resources. When governments are developing research there is a tendency of very high expectations. We would like to see this addressed. Commodity prices are settling, but when people do not understand the trends and cycles, they expect a great deal from the investors.
As Kilimapesa, we have a very good relationship with local communities, and we pay a lease fee to them every month. We also have an arrangement for royalty sharing, which goes directly to the community. Aside from where specialized skills are needed, we try to give employment preference to locals. There are long-term benefits for the investor, community and country if the process is followed properly. It is also very important to raise the skill level of the local people. The government has initiated some courses in mining and processing through some of our universities, which as a result are now producing graduates for this industry. In Kilimapesa’s new plant we are ensuring that, for every expat brought in, there is a local understudy to eventually take their place.
Are there any challenges that still need to be addressed going forward?
As an industry, we are concerned about the relationship between the different levels of government. The minerals are held by the people of Kenya, but held in trust by the national government. This area needs to be harmonized so investors do not face challenges. Collaboration and transparency is key. In a market with so many unpredictable factors, we need as much security and predictability as possible.
As the Chamber we are very happy to tell investors, both local and international, that there is potential in our country, and that there is a positive system under development and a positive framework in place. There is a lot of underexplored land and a great deal of opportunity.
What is the vision for Kilimapesa?
We want to be the top producer of gold in Kenya. We believe we are the best in terms of processes, sharing with communities. We believe there is much more than our originally estimated 700,000-ounce resource, and we plan to continue driving our expansion effectively and sustainably.