TIDMSHG
RNS Number : 1387X
Shanta Gold Limited
24 April 2023
24 April 2023
Shanta Gold Limited
("Shanta Gold", "Shanta" or the "Company")
Q1 2023 PRODUCTION & OPERATIONAL UPDATE
Shanta Gold (AIM: SHG), the East Africa-focused gold producer,
developer and explorer, announces its production and operational
results for the quarter ended 31 March 2023 (the "Quarter", "Q1" or
the "Period") for its East African assets, including New Luika Gold
Mine ("NLGM" or "New Luika") and Singida Project ("Singida") in
Tanzania and West Kenya Project ("West Kenya") in Kenya.
Eric Zurrin, Chief Executive Officer, commented:
"I am pleased to report a strong start to 2023, with first gold
pour at our new Singida Gold Mine taking place on the 30th of
March. As a result, Shanta is now a 100,000 ounce per year gold
producer with a diversified resource base, a de-risked balance
sheet, and significantly more financial flexibility. Ramp up at the
site is progressing well, with 2,200 ounces produced in the first
22 days of April 2023, and we expect to announce our 2023
production guidance and five-year plan in this quarter.
Production during Q1 at New Luika was 15,317 ounces, slightly
lower than budget due to temporarily reduced availability of
underground equipment in February, which was rectified in March,
and generally excessive rains. Despite this, gold production for
both January and March was above budgeted production. April
production is on track for approximately 6 Koz and we remain
confident of hitting full year guidance at the mine of 66-72
Koz.
"At West Kenya, we announced an exciting resource update
following exceptional exploration and drilling results and
resources now total 1.76 million ounces at 5.55 g/t Au including
0.72 million ounces in the Indicated category grading 11.45 g/t Au.
With drilling set to recommence in the next few weeks, we are
excited by the potential for West Kenya to become one of Africa's
next high-grade gold mines.
"Our performance is underpinned by our excellent safety record,
which continued throughout the Quarter and saw no recordable
incidents at both Singida and New Luika. Meanwhile, our balance
sheet remains healthy positioning us well to unlock further
long-term value for our shareholders for the remainder of the
year."
Highlights
-- First gold pour at the new Singida Gold Mine on 30 March 2023;
o Singida increases Shanta's production to approximately 100,000
oz pa;
o Ramp-up at Singida progressing well including 2,200 oz
produced in the first 22 days of April 2023;
-- NLGM Q1 production of 15,317 oz;
-- Updated West Kenya Project mineral resource estimate to 1.76 Moz grading 5.55 g/t Au;
-- Group total resources updated to 3.67 Moz grading 3.28 g/t Au;
-- VAT refunds and offsets of US$5.7 m in Q1; and,
-- Excellent safety record with TRIFR rate of 0.00 (Singida) and 0.00 (NLGM).
Q1 2023 Financial Summary
-- Cash, and available liquidity(1) of US$11.5 m at 31 March
2023 (Q4: US$13.0 m), including US$1.5 m undrawn from the working
capital facility;
-- Gross debt of US$29.1 m (Q4: US$24.1 m);
-- Operating costs of US$1,141 /oz (Q4: US$1,112 /oz) and AISC
of US$1,429 /oz (Q4: US$1,347 /oz) in the Quarter, respectively;
and
-- Capital expenditure and investment totalled US$9.8 m
including US$6.7 m for Singida construction, US$2.4 million for
NLGM, and US$0.7 m for West Kenya.
Q1 2023 Operational Summary
New Luika Gold Mine
-- Zero LTIs during the Quarter;
-- 217,479 t milled (Q4: 227,207 t) from underground and open pit sources;
-- Average head grade of 2.52 g/t Au (Q4: 2.60 g/t Au) blended
from underground, open pit, and existing ROM stockpile sources;
-- Average recoveries of 87.1% (Q4: 88.0%);
-- Gold production of 15,317 oz (Q4: 16,742 oz);
-- Run of Mine ("ROM") stockpile of 224,426 t of ore grading
0.99 g/t Au (Q4: 207,392 t grading 0.92 g/t Au) containing
approximately 7,124 oz.
Singida Gold Mine
-- Zero LTIs during the Quarter.
-- Singida achieved first gold pour in March 2023 which will
increase Shanta Gold Group production by approximately 45%-50% to
100,000 oz/pa;
-- Construction was completed on time and on budget;
-- Average head grade of 3.15 g/t Au from open pit and existing ROM stockpile sources;
-- Ore stockpile level at Singida is currently 194,196 t grading
an average of 2.70 g/t Au (Q4: 171,500 grading 2.61g/t Au) for
16,883 contained ounces;
-- Ramp-up at Singida is progressing well including 2,200 oz
produced in the first 22 days of April 2023;
-- Commercial production, 2023 production guidance, and 5-year plan expected in Q2 2023.
West Kenya Project
-- Total resources increased to 1.76 Moz grading 5.55 g/t Au,
from 1.18 Moz since Shanta commenced drilling at the start of
2021;
-- Indicated resources increased 1.14 Moz grading 4.86 g/t Au
including 722 Koz grading 11.45 g/t Au;
-- Drilling to recommence in the next few weeks following the
recent completion of the updated Mineral Resource Estimate and
preparation of Phase 3 drilling plans;
-- Workshop planned this month to assess accelerated timeline to
permitting and path to production;
Corporate Social Responsibility ("CSR")
-- Ongoing construction of two classrooms and one teachers'
office at the Mbangala secondary school and one teachers' house at
the Miembeni primary school;
-- Shanta committed to an Underprivileged Students' Sponsorship Program for 2023;
-- Completion of the construction of Mwau primary school toilets
& maternity ward at the Mang'onyi dispensary.
Note: 1. Available liquidity has been derived as unrestricted
cash, the sale value of doré available for sale at the end of the
Period (net of royalties and expected selling costs).
Note: 2. AISC figures published include development costs, in
line with the WGC definition
Note 3. Adjusted EBITDA is earnings before interest, tax,
depreciation, and amortisation which has been derived as operating
profit exclusive of depreciation/depletion of tangible assets,
amortisation of intangible assets and exploration expenditure at
the West Kenya Project totalling US$0.7 m.
Analyst conference call and presentation
Shanta Gold will host an analyst conference call and
presentation today, 24 April 2023, at 09:30am BST. Participants can
access the call by registering via the link below.
https://secure.emincote.com/client/shanta/shanta003/vip_connect
The presentation will be available for download from the
Company's website: www.shantagold.com. A recording of the
conference call will subsequently be available on the Company's
website.
Investor Conference Call
Shanta Gold is hosting a live investor presentation via the
Investor Meet Company platform today, 24 April 2023, at 10:30 am
BST. The presentation is open to all existing and potential
shareholders and questions can be submitted any time during the
live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet Shanta Gold via:
https://www.investormeetcompany.com/shanta-gold-limited/register-investor
Investors who already follow Shanta Gold on the Investor Meet
Company platform will automatically be invited.
Enquiries:
Shanta Gold Limited
+44 (0) 14 8173
Eric Zurrin (CEO) 2153
Michal Devine (CFO)
Nominated Adviser and Joint Broker
Liberum Capital Limited
Scott Mathieson / Kane Collings / Nikhil Varghese +44 (0) 20 3100
/ Lucas Bamber 2000
Joint Broker
Tamesis Partners LLP
+44 (0) 20 3882
Charlie Bendon / Richard Greenfield 2868
Public Relations
FTI Consulting
+44 (0) 20 3727
Sara Powell / Nick Hennis 1426
About Shanta Gold
Shanta Gold is an East Africa-focused responsible gold producer,
developer, and explorer. The Company has an established operational
track record, with defined ore resources on the New Luika and
Singida projects in Tanzania, with reserves of 625 Koz grading 2.9
g/t Au, and exploration licences covering approximately 800 km(2)
in the country. Alongside New Luika and Singida, Shanta also owns
the high-grade West Kenya Project in Kenya with resources of 1.76
Moz including 0.72 Moz in the Indicated category grading 11.45 g/t
Au, and exploration licences covering 580km(2) containing multiple
highly-prospective targets. With a strong balance sheet, a growing
diversified portfolio and consistent dividend payments, Shanta
offers a resilient investment opportunity for the near- and
long-term. Shanta is quoted on London's AIM market (AIM: SHG) and
has approximately 1,051 million shares in issue.
Competent Person Statement
The technical information contained within this announcement has
been reviewed by Juma Kisunda (the Company's Technical Services
Manager), who is a Member of the Australasian Institute of Mining
and Metallurgy (AusIMM) and Yuri Dobrotin, P.Geo. Membership
No.0702 (Shanta's Group Exploration Manager), who is a practicing
member of the Association of Professional Geoscientists of Ontario,
Canada (PGO). They have sufficient experience that is relevant to
the style of mineralisation and type of deposit under consideration
and to the activity being undertaken to qualify as a Competent
Persons as defined in the 2012 Edition of the 'Australasian Code
for Reporting of Exploration Results, Mineral Resources and Mineral
Reserves' and for the purposes of the AIM Guidance Note on Mining
and Oil & Gas Companies dated June 2009, and National
Instrument 43-101 ("NI 43-101).
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as amended by The
Market Abuse (Amendment) (EU Exit) Regulations 2019.
Q1 2023 PRODUCTION & OPERATIONAL UPDATE
Operational Summary - New Luika Gold Mine
Safety, Health and Environment
There were no LTI's in the period with a total of 2,159,374
man-hours worked without a Lost Time Injury. Shanta maintains its
track record of operating among the safest gold mining operations
of its peers and achieved a Total Recordable Injury Frequency Rate
("TRIFR") (per 1 million hours worked) of 0.00 for 2023 (Q4:
0.00).
Production Summary
Q1 2023 Q4 2022 Q3 2022 Q2 2022
Tonnes ore milled 217,479 227,207 217,108 216,184
-------- -------- -------- --------
Grade (g/t Au) 2.52 2.60 3.18 2.83
-------- -------- -------- --------
Recovery (%) 87.1 88.0 88.0 88.7
-------- -------- -------- --------
Gold (oz)
-------- -------- -------- --------
Production 15,317 16,742 19,532 17,527
-------- -------- -------- --------
Sales 15,995 16,621 19,321 17,225
-------- -------- -------- --------
Silver production (oz) 23,152 19,790 26,856 26,536
-------- -------- -------- --------
Realised gold price (US$/oz) 1,918 1,731 1,727 1,866
-------- -------- -------- --------
Gold production during the period was 15,317 oz. Production was
impacted in February by underground equipment availability which
was restored in March 2023 and operational challenges faced due to
excessive water from unexpected levels of rainfall in the month
which impacted the crusher and haulage of mined physicals. During
the quarter, it was resolved to install a pre-leach thickener at
New Luika Gold Mine as recommended late last year targeting an
improvement in gold recoveries supported by an attractive payback
period. The thickener project will commence in May 2023 with
commissioning expected in Q1 2024.
Gold production for both January and March were above budgeted
production by 1% and 3% respectively.
A total of 166,186 t of ore grading 3.30 g/t Au was mined from
underground in Q1 compared with 176,997 t of ore grading 3.41 g/t
Au in Q4 2022. 64,308 t ore grading 1.44 g/t Au was mined from open
pits in Q1 compared with 65,207 t of ore grading 1.53 g/t Au in Q4
2022. Mined ore from open pits was 34% above budget of 47,998 t,
attributable to better surface mining equipment and mechanical
availability following the engagement of a second contractor in
Q4-2022.
The ROM stockpile at the end of Q1 was 224,426 tonnes of ore
grading 0.99 g/t Au (Q4: 207,392 t grading 0.92 g/t Au).
Processing of milled ore during the Quarter totalled 217,479
tonnes, in line with plan ( Q4: 227,208 t). The average head grade
of 2.52 g/t Au (Q4: 2.60 g/t Au) included a blend of material from
underground, open pit, and existing ROM ore stockpile sources.
Average recoveries of 87.1% were achieved in the plant during the
period (Q4: 88.0%).
Financial
Underground mining cash costs were US$9.8 m for Q1, coming in 8%
below budgeted costs of US$10.6 m. These cost savings can be
attributed to a change in backfill strategy as part of a mine plan
optimisation task and ongoing cost saving initiatives and
efficiency improvements conducted in the Quarter.
Adjusted Operating Costs of US$1,141 /oz (Q4: US$1,112 /oz) and
AISC (1) of US$1,429(1) /oz (Q4: US$1,347 /oz) were achieved in the
Quarter, respectively. Q1 AISC was 5.3% higher than budget due to
slightly lower than budgeted production and higher royalty payments
owing to a higher than budgeted gold price of US$1,700 /oz.
Gold spot prices continued their upward trend in Q1 resulting in
the average selling price achieved per ounce being US$1,918 /oz, up
from US$1,731 /oz in Q4 2022. Throughout the Quarter, free cash
flow generation has been prioritised to complete construction at
the Singida Gold Mine.
An adjusted EBITDA(2) of US$7.4 m (Q4: US$5.9 m) was achieved
for the Quarter. The increase being mainly attributable to the
increase in gold spot selling prices and reduced exploration and
evaluation costs.
In Q1, capital expenditure at New Luika was US$2.4 m (Q4: US$4.4
m), which predominately related to underground development at the
Luika mine, and Tailings Facilities expansion.
In the Quarter, the company received a VAT offset of US$4.6 m,
which was offset against its 2022 year-end tax liability and a cash
refund of US$1.1 m. The company's Tanzanian VAT receivable
increased from US$29.3 m in Q4 to US$32.0 m in Q1.
At the end of March 2023, remaining gold price protection
outstanding relating to the Standard Bank loan and Stanbic Bank
working capital facility in the form of Zero Cost Collars totalled
6.3 Koz including 5.3 Koz covering the period March to June 2023
between US$1,600-US$1,950 /oz, and 1.0 Koz covering in April 2023
between US$1,725- US$1,756 /oz. The hedge contracts were entered
into as a condition to the working capital facility. No additional
hedges will be added.
Note: 1 AISC figures published include development costs, in
line with the WGC definition
Note 2. Adjusted EBITDA is earnings before interest, tax,
depreciation, and amortisation which has been derived as operating
profit exclusive of depreciation/depletion of tangible assets,
amortisation of intangible assets and exploration expenditure at
the West Kenya Project totalling US$0.7 million.
Operational Summary - Singida Gold Mine
The Singida Project had no LTI's in the Quarter with a TRIFR of
0.00. A total of 972,479 man-hours has been worked without a Lost
Time Injury (LTI).
Construction of the Singida Gold Mine progressed as planned and
on budget, with the mine achieving first gold pour on 30 March
2023. With first production at Singida completed, the mine will add
45%-50% to the Group's annual production profile.
Open pit mining continued with operations focused on Gold Tree
and Vivian pits. Total ore of 33,221 t was mined in the Quarter,
54% higher than budgeted levels of 21,580 t. Contained gold ounces
mined in the Period was 2,983 oz, 77% higher than budget of 1,683
oz. Overall ore stockpile level at Singida is currently 194,196 t
grading an average of 2.70 g/t Au (Q4: 171,500 grading 2.61 g/t Au)
for 16,883 contained ounces (Q4: 14,395 ounces).
Ramp-up at Singida is progressing well including 2,200 oz
produced and 16,000 tonnes milled in the first 22 days of April
2023.
Declaration of Singida commercial production, Singida 2023
guidance and Singida 5-year mine plan is expected to be
communicated later in Q2 2023.
West Kenya Exploration Project
During the Quarter, the Project announced a Resource Update
following a year of exceptional exploration and drilling results.
Total West Kenya resources now stand at 1.76 Moz, an increase from
1.18 Moz since Shanta commenced drilling at the start of 2021.
Indicated Resources totalled 1.14 Moz, an increase from NIL since
the start of 2021.
The assessment of the Ramula targets continued in Q1 2023, with
the Ramula Camp currently including four high priority targets
located less than 5km from Ramula. 2023-24 planned drilling on the
targets adjacent to Ramula is aiming for a substantial resource
additions and new discoveries. In addition, seven early stage
high-prospective targets have been identified between 5 km to 30 km
from Ramula.
Geotechnical logging commenced in the Quarter with the aim of
the program being to carry out a detailed geotechnical logging on
the Ramula drilling holes. A total of 794 m have been
completed.
Initial Feasibility Study workstreams continued with conceptual
mine designs being created for the Ramula and Isulu-Bushiangala
sites. Further workshops are planned to gain clearer consensus
regarding advancement of the project into its FS stage.
Corporate Social Responsibility ("CSR")
During the Quarter, Shanta continued its construction of two
classrooms and one teachers' office at the Mbangala secondary
school and one teachers' house at the Miembeni primary school. Both
projects are expected to be completed in April 2023.
Following the completion of the five classrooms at Saza and
Patamela primary schools in 2022, Shanta donated 125 desks in the
Quarter.
Further highlighting Shanta's commitment to improving the
education prospects of the youth in the surrounding community,
Shanta committed to an Underprivileged Students' Sponsorship
Program, which will provide a total of 316 students with uniforms,
shoes, and stationary for the 2023 school year.
Lastly, at Singida, the Mwau primary school toilets &
maternity ward at the Mang'onyi dispensary were completed with
official handover occurring in April 2023. These initiatives will
greatly improve the quality of life for the students and women of
the Ikungi region.
Country Overview
In September 2022, the Government of Tanzania revoked the 2020
Mining (State Participation) Regulations and reissued new
regulations governing Section 10 of the Mining Act that had been
amended in 2017. In April 2023, the Government of Tanzania signed
agreements worth approximately US$650 m with various international
mining companies to enable foreign investment. As disclosed by the
Company in October 2022, discussions between the Ministry of
Minerals and Shanta are expected to take place in 2023 and commence
shortly.
Post Period
Shortly after the Period end, Shanta Gold published its 2022
Sustainability Report, which covers its activities for the year
ended 31 December 2022 both at a corporate level and on the ground
at the New Luika Gold Mine, the Singida Gold Project in Tanzania,
and the West Kenya Project in Kenya.
S
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END
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