Gold produced rose 7% to 20,416 ounces compared to the preceding three months, while cash generated was US$6.6mln.
Underground mining at New Luika also got underway with 15,171 tonnes of underground ore processed at a grade of 10.61 g/t.
Commercial production is on schedule for the end of this quarter said Toby Bradbury, chief executive.
Gold sales totalled 23.3koz in the quarter at an average gold price $1,249/oz.
Cash costs rose to US$553 per ounce but remain very competitive with other similar scale mines and compared to a gold price currently of around US$1,250 per ounce though Shanta has sold forward 25,000oz from April to October at US$1,292.
Shanta recently published a revised mine plan for New Luika that increases production by 39% to 500,000 by 2023 based on reserves at deposits nearby.
Bradbury added it was a promising start to the year, with a greater margin than planned and putting it on track to meet 2017 guidance of 80-85,000oz at all-in costs between US$800-850/ oz.
“Due to the move underground, the company anticipates Q2 2017 gold production to be its lowest quarter for 2017, as it moves through the ramp-up process of the production."
A good quarterly update says broker SP Angel
Broker SP Angel said it was a good quarterly operations update highlighting the underground development works progress with annual production and costs guidance intact.
Second quarter gold production is guided to be the weakest this year before mining ramps up and starts to deliver high grade tonnages through the remainder of the year, which with the better than expected first quarter is likely to mean thatoverall the first half is on track.
One issue Shanta did flag is that it is owed US$12mln in VAT by theTanzanian government and and that has put back pilot drilling on the Singida project, also in Tanzania.
Other companies operating in Tanzania have also reported VAT reypment delays, notably Acacia Mining said the broker.
Shares eased 1% to 8.9p.
-- adds broker comment --