The government has delayed a mining licence to London-based Red Rock Resources which plans to produce gold in Migori, forcing the multinational to retain a £5.2 million (Sh691 million) provision it had made for its troubled local operation.
The company, which is eyeing a 243 square-kilometre site with deposits of the precious metal valued at more than Sh180 billion, has been waiting for the licence since 2018.
The process of awarding the licence has dragged on despite approval of the application by the Mining Rights Board (MRB) and the same being uploaded on the Ministry of Petroleum and Mining website.
“The final administrative step has been slow in coming, and to Red Rock’s disappointment had not occurred as expected by the time of this report going to print,” the multinational said in a trading update.
“The directors have therefore taken the conservative decision not to write back in these accounts any part of the £5.2 million (Sh691 million) impairment taken in the June 30, 2015 accounts pending resolution of the court case.”
The company in 2018 settled a court case with the government which had terminated its mining licence in May 2015.
A previous resource estimate placed gold deposits at the South West Kenya site at 1.2 million ounces that would have a market value of Sh183.4 billion based on the current bullion price of about $1,514 (Sh153,000) per ounce.
Red Rock did not say why the Ministry of Mining had cancelled its initial mining licences.
The company’s permits that were cancelled, SPL122 and SPL202, were issued under the former Mining Act.