Shanta Gold Ltd (LON:SHG) has agreed a US$10mln loan facility from Tanzania's Exim Bank secured on its newly commissioned 7.5Mw power station at the New Luika gold mine.
The term loan runs for four years at variable interest of 7.25% per annum (2.75% below the Exim Base Lending Rate).
Toby Bradbury, Shanta’s chief executive, said the power station had been a great success.
“In 2016, Shanta decided to pay the capital costs of the power station out of cash flow in anticipation of improved financing terms, which it has now realised with the Exim term loan.
"It is now delivering reliable power with a significant drop in per kilowatt hour power costs.
"The power plant's commissioning in Q1 2017 will serve NLGM for many years and deliver the increased power required to support the new underground operation that remains on schedule to deliver first stope ore this quarter."
"As noted in Shanta's recent quarterly update, the company continues to defer non-essential expenditure, while it completes the development of the underground operation, due to the large sum, now outstanding, in VAT refunds."
Broker Shore Capital says the Exim loan is very timely, given that “the large sum” of outstanding VAT refunds had recently forced Shanta to defer non-essential expenditure whilst New Luika’s underground operations are developed (eg the Singida project, exploration drilling and community projects).
Its size means it will have a far more meaningful impact on Shanta’s than the second equipment finance agreement entered with Sandvik last week.
Shares dropped 0.45p to 7.92p.
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