viewShanta Gold Limited

Shanta Gold to clear debts in 2020 as production rises


  • Tanzania-focused gold miner
  • 2019 production rises to 84,500oz
  • Proposal to IPO Singida asset to raise US$20mln for construction

Quick facts: Shanta Gold Limited

Price: 12.3 GBX

Market: AIM
Market Cap: £97.65 m

How it's doing

Shanta Gold Limited (LON:SHG) comfortably beat its 2019 production forecast even with reduced output from the New Luika mine in the fourth quarter.

The Tanzania-based miner produced 19,550 ounces (oz) of gold in the last three months taking the yearly total to 84,500oz, 500oz better than the top of the guided range.

Head grade in the last three months was 3.8 grammes per tonne (g/t) compared to 4.5 g/t in the previous quarter, while costs were also affected by an overhaul of its power station generator.

For 2020, Shanta expects to produce between 80,000-85,000oz at a sustainable cost of US$830-880/oz.

Strong cashflow currently being generated will clear the group's debts fully during the year.

In the New Luika mine area, exploration drilling at Bauhinia Creek North and Elizabeth Hill North has intersected mineralisation over sizeable widths, suggesting significant potential for additional resources to add to the mine plan Shanta said in October.

Singida float

Plans to float its Singida gold mining asset in Tanzania on the Dar es Salaam stock exchange are progressing.

The gold miner wants to raise US$20mln to develop Singida, with the IPO documents now lodged with the Tanzanian authorities.

Shanta will retain at least 51% ownership of Singida and will operate the project with the money to be used to start production and for exploration to expand the resource.

Newly published project economics suggest production will average 26,000oz per annum for an initial six-year period.

Singida will cost US$16mln to get up and running and a further US$3mln in working capital but the investment is expected to pay off as the project has a net present value of US$31mln and an internal rate of return of 67%.

A life project cash cost of US$794/oz is well below the price of gold.

Shanta sees “significant further upside” for the project with substantial resources – around 344,000oz – currently sitting outside the project economics.

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Inflection points

  • Details of Singida IPO
  • More VAT repayments from Tanzanian government
  • Gold price continues to rise
  • Resource upgrade from drilling at New Luika satellite deposits


Blue sky

Production above 100,000oz takes Shanta to next level in league of miners

Additional acreage around New Luika and Singida can boost output even more

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