viewShanta Gold Limited

Shanta raises almost US$16mln from well-backed funding

Share placing raised US$500,000 more than expected after strong demand

Production is rising and costs are falling

Shanta Gold (LON:SHG) is restructuring  its finances as its expands underground at the New Luika mine in Tanzania.

The gold miner will raise US$15.75mln in total, US$10.5mln (£7.3mln) through a share placing and a further US$5.25mln in a silver by-product streaming agreement.

Shares were placed at 6.5p with the money raised to buy back US$10mln of senior convertible notes.

The term of the remaining US$15mln of senior convertibles has beenextended by a further two years to 2019.

After the placing, Shanta intends to launch an open offer to raise up to a further €5mln.

Toby Bradbury, Shanta’s chief executive, said there was significant demand and the placement was well received by both existing and new institutional investors.

He added the placing and silver stream agreement had now given it the financial headroom to explore satellite deposits across the New Luika licence area.

Revenues in 2015 dropped slightly to US$95.7mln (US$115mln) due to a slow production start to the year and lower gold price.

Underlying profits were US$31.9mln (US$33.8mln) though there was a statutory loss of US$17.3mln after a one-off charge of US$21mln for waste stripping and future expenditure.

Gold production at 81,900 oz exceeded guidance but was lower than 2014, while sales were also down at 80,600 (87,760) ounces at an average price of US$1,160.

All-in-costs were US$834 per oz (US$941).

For the current year, Shanta anticipates production will be at the high end of its forecast guidance of 82,000-87,000 oz while cost estimates are also under review after a good performance in the first quarter.

Bradbury added: "While 2015 saw a lower gold price than the previous year, Shanta's position in the lowest cost quartile of gold producers ensures the company is able to withstand a continued volatile market while delivering significant margin into the business.

“A major focus for the 2016 financial year, will be the transition to underground mining, alongside the renewed emphasis on the company's exploration programme set to define additional resources and reserves within the mining licence,” he added.

Quick facts: Shanta Gold Limited

Price: 8.4 GBX

Market: AIM
Market Cap: £66.14 m

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