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Shanta Gold Limited: DEEP DIVE

Shanta Gold Limited looks to step up a level as Singida moves forward

Latest forecast is for 2019 production to rise to between 80-84,000oz
OVERVIEW: SHG The Big Picture
Underground production has started at New Luika


  • Tanzania-focused gold miner

  • 2019 production to rise to 80-84,000oz

  • Proposal to IPO Singida asset on Dar es Salaam stock exchange to raise US$20mln


How is it doing

Production in 2018 was 81,872 ounces of gold, all from the New Luika mine.

Revenue rose to US$103.8mln, up from US$101.5mln in the prior year, while earnings (EBITDA) increased by 21% to US$47.7mln and operating profit by 75% to US$19.3mln. Net profit amounted to US$8mln.

Net debt reduced by US$8mln, to US$31.5mln. Shanta Gold Limited (LON:SHG) had US$9mln of cash and equivalent.

The company set production guidance for 2019 at 80,000 to 84,000 ounces.

"2018 was a transformational year for Shanta, both operationally and financially,” said Eric Zurrin, Shanta chief executive


Singida float

Shanta, meanwhile, is to float its Singida gold mining asset in Tanzania on the Dar es Salaam stock exchange.

The gold miner wants to raise US$20mln to develop Singida, with the IPO expected to take between 6-12 months.

Shanta will retain at least 51% ownership of Singida and will operate the project with the money to be used to start production and for exploration to expand the resource.

Newly published project economics suggest production will average 26,000oz per annum for an initial six-year period.

Singida will cost US$16mln to get up and running and a further US$3mln in working capital but the investment is expected to pay off as the project has a net present value of US$31mln and an internal rate of return of 67%.

A life project cash cost of US$794/oz is well below the price of gold.

Shanta sees “significant further upside” for the project with substantial resources – around 344,000oz – currently sitting outside the project economics.

An environmental and social impact assessment is expected in the first quarter of 2019, which would complete the permitting process at Singida.


Exploration targets

Elsewhere, Shanta has identified new targets including Lambo, which is 6.6km northwest of the New Luika plant, and Quartzberg, located 45km from the flagship gold mine.

Zurrin said trenching at Lambo target has yielded "excellent grades" and warrants further exploration while drilling at Quartzberg is underway. 

In 2019, the group aims to double its exploration budget from the US$1.5mln it spent this year with a focus on putting more money into the ground.



VAT repayments

Regarding the VAT repayments Shanta Gold is owed by the government, Zurrin added: “We were told that there’s an ongoing process with a short-listed group of companies that are being reviewed, hopefully for a final time by the TRA (Tanzania Revenue Authority) so that doesn’t mean we know when we’re going to receive the money but it certainly shows that there’s intent from the government to go through with what they are saying.”


Inflection points

  • Details of Singida IPO

  • Vat repayments from Tanzanian government

  • Gold price continues to rise


Blue sky

Production above 100,000oz takes Shnata to next level in league of miners

Additional acreage around New Luika and Singida can boost output even more





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Shanta Gold Limited Timeline

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