Acacia Mining says West Kenya project holds high-grade gold

The company, which is majority owned by Canada’s Barrick Gold (TSX, NYSE:ABX) — the world’s No.1 gold miner — said all inferred material is located on the Acacia prospect with multiple lodes open laterally and at depth. It also noted its Bushiangala prospect, “which has known mineralization”, had not yet been incorporated to the resource.

With six drill rigs currently active on site, and two more to follow soon, Acacia expects to increase the resource to 2 million ounces by the end of the year. It also plans to kick off a scoping study looking at the potential for an underground mining operation towards the end of the year.

“This is one of the highest grade projects in Africa today, and we believe that this initial resource is a first step in the delineation of a multi-million ounce high-grade corridor,” chief executive officer Brad Gordon said in the statement.

Acacia, which already operates Bulyanhulu, North Mara and Buzwagi mines in Tanzania, spent the past two years focused on bringing down costs, which were among the sector’s highest in 2013.

Last month, it was disclosed that it was in merger talks with Canada’s Endeavour Mining (TSX:EDV), which already owns five operating mines in Africa and it’s building its flagship Houndé project, in Burkina Faso.

Experts estimate a combination of both companies would create a $3.4 billion Africa-focused gold producer.