Shanta Gold Ltd (AIM:SHG) highlighted its exploration success and strong financial health as it announced its results for the first half of 2021.
The East Africa-focused gold miner recently updated its five-year operating plan, outlining a strategy to transform the company into a 110,000+ ounces gold producer by 2023. It has forecast gold production of about 499,000 ounces for the five-year period until 2026.
Chief executive Eric Zurrin noted that exploration in the Luika and BC East Area 1 generated new high-grade resources in the first half and added that “West Kenya is very promising with phase 1 drilling now complete and highly encouraging assay results including one of our highest-grade intersections at 4m at 706 g/t”.
A resource update for West Kenya is expected in September.
"Our forecast increase in reserves and resources demonstrates the huge potential in the portfolio, and our extension of the reserve-based mine life at New Luika and Singida underpins our confidence in the long-term sustainability of both assets," Zurrin said.
In its earnings release, Shanta said revenue for the first six months declined by 21% to US$57.8mln as gold sales fell to 31,977 oz from 44,018 oz in the same period of 2020. The fall in revenue was partially offset by a rise in the average realised gold price to US$1,807 /oz from US$1,533 /oz).
As previously forecast by the company, gold production fell to 28,842 oz in the period from 42,383 oz, due to lower-than-anticipated grades from underground mining.
EBITDA came in at US$17.4mln, down from US$27.5mln, with pre-tax profit declining to US$8.6mln from US$15.3mln.
The AIM-listed company is proposing an interim dividend of 0.10p. This follows a maiden final dividend of 0.10p paid for 2020.
Shanta Gold had net cash of US$24.2mln at the end of June.
Gross debt declined to US$0.8mln from US$11.4mln at the end of 2020, after the company’s convertible loan notes and debt facility with Exim Bank were repaid in full.
The company said it received US$4.2mln in VAT offsets during the first half and a further US$2.1mln VAT cash refund after the period end from the Tanzanian government.
“Whilst we are disappointed that our H1 gold production and sales are lower than last year, our strong fundamentals of net cash, low debt and consistent operating cashflow attest to the company's robust financial health,” Zurrin said.
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