Shanta Gold Limited

Shanta Gold Limited looks to step up a level as Singida IPO moves forward


  • Tanzania-focused gold miner
  • 2019 production to rise to 80-84,000oz
  • Proposal to IPO Singida asset to raise US$20mln

Quick facts: Shanta Gold Limited

Price: 8.355 GBX

Market: AIM
Market Cap: £65.79 m

How is it doing

Shanta Gold Ltd (LON:SHG) booked revenues of US$53.6mln during the first half 2019 on production of 42,230 ounces of gold from its New Luika mine in Tanzania.

All-in sustaining costs rang in at US$730 per ounce, well below guidance, and below the US$757 turned in during the corresponding period a year ago.

However, a heavy depreciation charge of US$16mln helped push the company into a loss before tax of just over US$4mln.

Gross debt fell to just over US$30mln from US$40.5mln at the end of the 2018 full year, after principal repayments on borrowings and a US$4.9mln partial buyback of convertible loan notes during the period.

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.



Exploration targets

Elsewhere, Shanta has identified new targets including Lambo, which is 6.6km northwest of the New Luika plant, and Quartzberg, located 45km from the flagship gold mine.

Trenching at Lambo target has yielded "excellent grades" and warrants further exploration while drilling at Quartzberg is underway. 



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 IPOedocuments 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

  • 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 Shnata to next level in league of miners

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


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