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Shanta Gold swings into profit as cost-cutting initiatives take hold

"I'm delighted to report a profit after tax for the period of US$7.1mln," said CEO, Eric Zurrin. "In the same period last year, we recorded a loss after tax of US$2.1mln, showing the positive impact that our stringent cost focus strategy is having."
Gold bar on dollar bills
Half-year EBITDA rose to US$23mln from US$21.5mln the year before

Shanta Gold Limited (LON:SHG) hailed the success of its cost-cutting programme as it swung into profit at the half-year stage.

The East Africa-focused gold producer made a profit before tax of US$8.45mln in the first half of 2018, compared to a loss the year before of US$649,000.

READ: Shanta Gold tipped for big profit hike as underground operations hit stride

Revenue eased to US$50.24mln from US$52.75mln the year before, with the company selling 37,827 ounces (oz) of US$1,303 an ounce. Cash costs of production for the first half of the year was US$549 an ounce, up from US$549 in the same period of 2017, but were reduced to US$505 an ounce in the second quarter.

All-in sustaining costs rose to US$757 an ounce from US$715 an ounce the previous year, within the company’s full-year guidance range of US$680 to US$730 an ounce.

Shanta said it had achieved US$7.2mln of recurring cost reductions since September, improving the cost base by roughly US$85 per ounce produced in less than 12 months.

The miner achieved a new record for monthly underground production in June 2018 of 51,130 tonnes at 5.30 grams per tonne (g/t) for 8,705 oz contained gold. Guidance for full-year production was left unchanged at 82,000 to 88,000 ounces.

"Operationally, we are doing very well at New Luika - we achieved a record monthly underground production in June and importantly remain on track to achieve our annual production guidance for the year of 82,000 to 88,000 oz," said Eric Zurrin, the chief executive officer of Shanta.

"In addition to a strong operational performance and with a vision to increase our mine life, we have achieved a number of exploration successes in the first half of this year. At New Luika, we completed Phase 1 underground drilling at Bauhinia Creek, confirming the extension of high-grade mineralisation adjacent to our existing underground operation. At our second asset, Singida, we also announced two phases of exploration drilling results with encouraging intersections and I look forward to providing further updates on the project in the second half of the year," he added.

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