Shanta Gold Limited (LON:SHG) produced 19,723 ounces of gold in the third quarter at its New Luika mine in South-Western Tanzania.
Production was lower than budgeted as mine grades were lower than expected.
WATCH: Shanta Gold Limited's Eric Zurrin confident on a strong finish to 2018
In a production and operational update, the company said it now expects to produce around 80,000 ounces of gold in 2018 at an all-in sustainable cost (AISC) of US$750 an ounce. This represents a lowering of previous guidance, which was for output of 82,000 – 88,000 ounces at an AISC of US$680-730 per ounce.
The gold was produced at a cash cost of US$553 an ounce in the third quarter, or an AISC of US$769 an ounce, up from AISC of US$748 an ounce in the second quarter.
Capital expenditure during the third quarter rose to US$US$5.3mln from US$4.5mln in the second quarter, which was predominantly related to underground development and equipment, inclusive of Ilunga pre-production capital.
At the end of September, the company’s cash balance had ebbed to US$8.6mln from US$8.9mln at the end of June but net debt narrowed to US$35.1mln from US$38.1mln.
“Shanta continues to deleverage its balance sheet despite not receiving the long-awaited VAT refund,” said Eric Zurrin, the chief executive officer of Shanta.
On the plus side, the company said “encouraging communication” had been received from the Tanzania Revenue Authority and Treasury regarding preparations for the resumption of VAT refunds.
READ: Shanta Gold swings into profit as cost-cutting initiatives take hold
"Exploration is a key focus for Shanta and it is, therefore, a positive development for us that our preliminary drilling has already replaced mined ounces during the Quarter. Trenching at the new Lambo target only 6.6km from our plant has yielded excellent grades and warrants further exploration. Further afield at the Quartzberg deposit, we have prioritised eight new high-grade targets and look forward to providing updates on these targets going forward," Zurrin said.
Preliminary exploration at Bauhinia creek has already replaced all mined ounces over the last three months. New discovery at Lambo, 6.6km north east of the plant, has hit bonanza grades in trenches totalling 2.1 metres at 47.12g/t Au and 3.15 metres at 32.73g/t Au
— Shanta Gold (@shanta_gold) October 11, 2018