Shanta Gold Limited (AIM:SHG, OTC:SAAGF) said its new mine in Tanzania, Singida, is on track for commercial production with two shipments made already.
As a result, the focus of activity has now switched back to exploration and expanding reserves, Eric Zurrin, Shanta chief executive, added.
“Although only 8 weeks in, Singida is performing ahead of expectations and gold production is promising. We have now completed two gold shipments from Singida and the mine is free cash flow positive," he noted.
In a statement, Zurrin said Shanta will use that cash flow for exploration elsewhere, with a 34,000 metre (m) programme of infill drilling underway both at New Luika (NLGM) in Tanzania where 8,000m will be drilled and in West Kenya, where 26,000m is planned.
Total costs for the programme, which will also include infill holes at Singida are budgeted at US$11.5mln.
Zurrin added: "Reserve life addition and mine life extension at NLGM are core to Shanta's equity case.
“Over the last 4 years, we have added 473,000 oz of new reserves at NLGM, illustrating the sustainability of the mine.
“West Kenya continues to impress and is the next clear leg in Shanta's growth story now that we have two producing gold mines in Tanzania.
“We expect to announce drilling assay results beginning in July and updates to our reserves and resource estimates throughout quarters three and four."