Two hand grenades were recovered in Vingirika village in Kwale County after a terror suspect was shot dead by police.
Mohamed Bakari was gunned down by Anti-terrorism detectives after he allegedly hurled grenades at police officers.
Police say the suspect, an Al Shabaab returnee, had killed an Mpesa agent in Likoni and run away with a lot of money.
"This is a timely incident, we thank members of public for their good participation," Msambweni police boss Benjamin Rotich said, adding that they had been trailing the suspect who is alleged to have committed several robberies in the area.
The killing comes after the government announced a Sh2 million bounty to any person with information that can lead to the arrest of wanted terrorist Abdullahi Abdi Sheikh.
Abdullahi is accused of plotting a series of terror attacks including the botched assault on Baure KDF camp in Lamu, and police believe is armed and dangerous.