How it's doing
Shanta generated revenue of US$147.4mln from its gold production operations in Tanzania during the year to 31 December 2020, up significantly from the US$112.8mln generated in 2019.
The company produced 82,978 ounces of gold, which it sold at an average realised price of US$1,495 per ounce, up from the US$1,377 average realised in 2019.
Profit after tax amounted to US$17.2mln, almost double the 2019 level while net cash at the year-end was US$37.3mln.
All-in sustaining costs for production at the New Luika mine rang in at US$841 per ounce while Shanta proposes paying a final dividend of 0.10p, payable in April 2021.
Shanta added it has upped its drilling spending to US$18mln over the coming year and expects to get good results over the year.
The growth and exploration potential cannot be overestimated, said Eric Zurrin, chief executive.
A scoping study for the assets (recently acquired from Canadian giant Barrick) indicated an operation that will produce 949,000 ounces over the life of the mine at an all-in sustaining cost of US$850 per ounce, inclusive of pre-production costs.
Cash costs were set at US$582 per ounce and the cost to construct the mine was pegged at US$161mln.
Overall, the project should generate US$118mln in earnings annually, with the internal rate of return ringing in at a punchy 110% and helped along by the average head grade of 9.3 grams per tonne.
Executive interview - CEO Eric Zurrin
- Singida comes on stream
- Development of capacity at New Luika
- Gold price continues to rise
What the broker says: Liberum
Shanta has the potential to double in value over the next twelve months according to a punchy update from broker Liberum.
The Africa-focused gold miner recently raised US$41mln in a modestly discounted placing that will facilitate prompt development of the highly attractive West Kenya project under any gold price scenario, added the broker.
“With this raise, Shanta has effectively de-risked its exploration plans at the West Kenya project under any gold price scenario.
“Just on the existing resource, West Kenya is a game-changer for Shanta with the scoping study estimating an NPV of US$340mln and the bulk of proceeds will be used to prove up the identified potential over the next three years.”