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UPDATE - Shanta Gold notches up quarterly sales record

Last updated: 11:28 20 Jan 2015 GMT, First published: 12:28 20 Jan 2015 GMT

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--adds comments from chief executive, updates share price--

Shanta Gold (LON:SHG) sold a record amount of the yellow metal in its latest quarter while production in 2014 was also ahead of expectations.

The Tanzania-based miner sold 24,700 ounces in the three months to December at US$1,253, higher than the spot  price due to the miner’s forward hedging.

Total gold sales over the whole of 2014 were 87,758 ounces at an average price of $1,289 per ounce. The miner had 31,500 ounces hedged at the year end at a price of $1,240 per ounce.

Production from the New Luika mine fell in the final quarter to 19,000 ounces, though this was higher than expected helping  the total for the year to hit 84,000 ounces compared to a forecast of between 80-83,000 ounces.

Costs in the final quarter were affected by lower grades, though Shanta said all-in-sustaining costs of US$941 were still within its target for the year.

Good progress has been made on its new US$40mln loan facility with Investec, it added, with completion expected this quarter while drilling is now underway to extend New Luika’s mine life.

Mike Houston, chief executive, said it had been a good year for Shanta both operationally and also in securing New Luika's future.

The plant has been largely de- bottlenecked and the higher plant throughput has provided the flexibility to process increased volumes of ore.

Key to 2015 will be the development of Bauhinia Creek, a high grade deposit close to New Luika, he said.

"The Bauhinia Creek push-back based on the 160 metre pit design remains on course to be largely complete by the end of 2015.

"This push-back will enable access to the high grade open pit ore reserves during 2015 and provide considerable operational flexibility when the underground mining comes on stream in H2 2016."

Houston added that the firm will focus on cost cutting and improving efficiency in 2015.

Cash generation during the year was healthy, despite the lower gold prices.

The mining operations generated US$34.5mln over 2014 and at end year the company had US$14.9mln of cash while net debt stood at US$40mln.

House broker Peel Hunt added that the balance sheet restructuring and internal cash generation should underpin a strong year ahead for the miner in 2015. Buy with a target price of 17p, it said. 

Shares were 7% higher at 11.4p.

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on 10/8/23