Shanta Gold Limited (LON:SHG) has hit its first underground gold at its New Luika mine at Bauhinia Creek in Tanzania.
The intersect occurred just after the nose fault, as predicted in the geological model, the junior said.
Toby Bradbury, chief executive, said: “Intersecting first ore is a pleasing result and we remain on track to commence first stoping of ore in Q2 2017."
Shanta is already producing gold from an open pit at the New Luika mine.
Production this year is expected to be between 82,000 and 87,000oz of gold.
SP Angel added: "Access to the underground ore at New Luika is key to the long term development strategy for the mine and to maintaining and extending its life.
"Data presented during the recent analysts’ site visit showed the underground development running ahead of schedule and now that the mineralisation has been encountered the mine team will be able to progress the preparatory development work in readiness for full production."
Shares rose 2% to 8.9p.
--updates for share price, broker comment --