TIDMSHG
RNS Number : 7368P
Shanta Gold Limited
21 October 2021
21 October 2021
Shanta Gold Limited
("Shanta Gold", "Shanta" or the "Company")
Q3 2021 PRODUCTION & OPERATIONAL UPDATE
Shanta Gold (AIM: SHG), the East Africa-focused gold producer,
developer and explorer announces its production and operational
results for the quarter ended 30 September 2021 (the "Quarter",
"Q3" or the "Period") for its East African assets, including New
Luika Gold Mine ("NLGM" or "New Luika") and Singida Project
("Singida") in Tanzania and West Kenya Project ("West Kenya") in
Kenya.
Highlights
-- Zero Lost Time Injuries ("LTI's"), with no LTI's since Q4
2017, surpassing 7.5 million man-hours;
-- Interim dividend of 0.10 pence per share announced for
payment in October alongside a commitment to ongoing sustainable
returns;
-- Encouraging assay results received at West Kenya, with
highlights including a hole which intersected 3.9 m at 63.8 g/t Au,
proximal to a previously reported hole which intersected 4.0 m at
706.3 g/t;
-- West Kenya resource update announced which included the following highlights:
o 117,600 ounces ("oz") grading 7.04 g/t converted to Indicated
Resources at a conversion rate of greater than 100%; and,
o Inferred Resources of 994,000 oz targeted for conversion over the upcoming infill drilling.
-- Cash and available liquidity (1) of US$27.5 m (Q2: US$28.0 m);
-- Gold production of 14,194 ounces ("oz") (Q2: 14,201 oz);
-- Cash Costs of US$1,063 /oz and All In Sustaining Costs
("AISC") of US$1,480 /oz, inclusive of:
o US$145/oz of exploration costs at New Luika, 59% higher than
H1, reflecting additional drilling and exploration works
o US$74/oz of sustaining capital relating to the bi-annual
refurbishment of the HFO gensets at the power station
-- Updated 5 year plan announced resulting in reserve-based mine
life being extended to 2026 at NLGM and 2029 at Singida;
-- US$2.1 m of VAT receivables received as a refund in Q3; and,
-- Mine construction progressing on track and as planned at
Singida where plant construction is underway and expected first
production early 2023.
Operational Summary - NLGM
-- 228,338 tonnes milled (Q2: 200,511 tonnes milled), in line
with forecasted throughput increase;
-- Average tonnes per day of 2,428 t (Q2: 2,306 t);
-- Average head grade of 2.2 g/t (Q2: 2.5 g/t);
-- Average recoveries of 88.6% (Q2: 88.6%); and,
-- Run of Mine ("ROM") stockpile of 151,645 tonnes of ore
grading 1.02 g/t (Q2: 158,458 tonnes grading 1.05 g/t).
Financial Summary
-- 3,914 oz contained within doré available for sale at the end
of the Period (Q2: 1,908 oz);
-- Net cash of US$19.5 m (Q2: US$24.1 m);
-- VAT receivable of US$27.7 m (Q2: US$ 27.4 m); and,
-- Positive engagement with the Tanzanian Revenue Authority
("TRA") ongoing regarding the Tanzanian VAT receivable which is
subject to verification audit before being available for further
refund and/or offsets.
West Kenya
-- Project Resource update announced in the Period included the following highlights:
o 82,700 oz grading 10.62 g/t converted to Indicated Resources
at Isulu with an implied resource conversion ratio of approximately
130%, from Inferred;
o 34,900 oz grading 3.92 g/t converted to Indicated Resources at
Bushiangala with an implied resource conversion ratio of
approximately 110%, from Inferred; and,
o 117,600 oz grading 7.04 g/t converted to Indicated in total at
a conversion rate of over 100%, following Phase 1 drilling of 9,383
metres through to 30 June 2021.
-- Q3 drilling results yielded numerous high-grade intervals,
suggesting the presence of high-grade shoots on all levels;
-- Approximately 994,000 oz of Inferred Resources is being
targeted during Phase 2 and 3 drilling for potential conversion to
Indicated category;
-- The Company continues to support the local community, and is
currently reflooring neighbouring primary school classroom floors;
and,
-- A second vocational security guard training programme has
been delivered in H2 2021 for 50 participants in partnership with a
local security company. 100 local youths have now been trained,
with over 95% securing employment as a result.
Singida
-- Mine construction progressing on track and as planned;
-- Onsite works continue, with the excavation of foundations at
the site of the Crushing Circuit and the installation of
approximately 7 km of bulk water supply pipelines;
-- Delivery of the Crushing Circuit from Metso expected in Q1 2022;
-- Manufacture of the Ball Mill on schedule with NCP;
-- Detailed design work on the TSF nearing finalisation
following necessary visits from various Ministry of Water officials
during Q3; and,
-- Post period, first blast of mining material completed on 15 October 2021.
New Luika Exploration
-- Exploration drilling continued during the period and mainly
focused on Bauhinia Creek ("BC") Deep, Luika and Porcupine
South;
-- Grade control drilling at BC underground, Luika surface and
BC North surface took place to refine the areas that will be mined
for the next 6 to 18 months; and,
-- Porcupine South mineral resources were updated during the
Period to include the western extension with an overall increase of
345 kt @ 1.75 g/t for 19 koz contained.
Corporate Social Responsibility ("CSR")
-- Official commissioning of the Patamela Water Project, which
has the capacity to supply approximately 30,000 litres of clean
water per day to residents;
-- Excavation work completed at the Mbangala Luika Dam water
project, which is expected to provide reliable and clean running
water to approximately 7,600 people once completed;
-- Commitment made to support the repair of a nearby stretch of
road by providing materials and technical expertise to help mend a
broken riverbank; and,
-- Strong attendance at training conducted during the period
with five local agriculture co-operatives, with the Company looking
to expand the number of farmers enrolled in Shanta's farming
initiative to over 2,000 by the end of the project.
Post Period
-- First blast of mining material completed at Gold Tree deposit on 15 October 2021.
2021 Guidance
-- Annual production guidance for 2021 was revised in July 2021
to 60,000 - 65,000 oz at AISC of US$1,325 - 1,375 /oz. This
guidance remains unchanged.
Note: 1. Available liquidity has been derived as unrestricted
cash, restricted cash and the sale value of doré available for sale
at the end of the Period (net of royalties and expected selling
costs).
Eric Zurrin, Chief Executive Officer, commented:
"2021 has proven to be a year of ongoing exploration success,
and our Q3 performance is no exception. With new high-grade
resources discovered at both New Luika and West Kenya and a rapidly
approaching first production at Singida on target for early 2023,
we remain excited in our near and longer-term prospects across our
diversified portfolio of assets in East Africa.
West Kenya is particularly promising, with a first Indicated
Resource of 117,600 oz grading 7.04 g/t at a conversion rate of
over 100% at both the Isulu and Bushiangala deposits announced
during the quarter. We remain committed to announcing a total
resource estimate in Q1 2022 following 30-45% of the total planned
drilling at West Kenya being completed.
Beyond exploration, our robust fundamentals of net cash, low
debt, ongoing government support and industry-leading safety
performance continue to place us in a position of strength. We are
proud to confirm that an interim dividend of 0.10 pence per share
will be paid this month, demonstrating our ongoing commitment to
deliver sustainable returns for our shareholders.
Our outlook remains positive as we work towards our five-year
plan and ambition to become a 100,000+ oz gold producer by
2023."
Analyst conference call and presentation
Shanta Gold will host an analyst conference call and
presentation today, 21 October 2021, at 09:30 BST. Participants can
access the call by dialling one of the following numbers below
approximately 10 minutes prior to the start of the call or by
clicking on the link below.
UK Toll-Free Number: +44 (0) 800 358 6374
UK Toll Number: +44 (0) 330 336 9104
PIN: 631501
https://events.globalmeet.com/Public/ClickToJoin/ZW5jPU5ReWtKSDd4VTV5ZWlDMU9Hb1VNWE5zaHl1NW5jVGVodEtGUTJ0WFZJNjVGb0ZCUy8vYXJhUT09
Participant Passcode: 631501
The presentation will be available for download from the
Company's website: www.shantagold.com. A recording of the
conference call will subsequently be available on the Company's
website.
Investor conference call
Shanta Gold is hosting a live investor presentation via the
Investor Meet Company platform today, 21 October 2021, at 10:30am
BST. The presentation is open to all existing and potential
shareholders and questions can be submitted any time during the
live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet Shanta Gold via:
https://www.investormeetcompany.com/shanta-gold-limited/register-investor
Investors who already follow Shanta Gold on the Investor Meet
Company platform will automatically be invited.
Enquiries:
Shanta Gold Limited
Eric Zurrin (CEO) +44 (0) 14 8173 2153
Luke Leslie (CFO)
Nominated Adviser and Joint Broker
Liberum Capital Limited
Scott Mathieson / Ed Thomas / Nikhil Varghese +44 (0) 20 3100 2000
Joint Broker
Tamesis Partners LLP
Charlie Bendon / Richard Greenfield +44 (0) 20 3882 2868
Public Relations
FTI Consulting
Sara Powell +44 (0) 20 3727 1426
About Shanta Gold
Shanta Gold is an East Africa-focused responsible gold producer,
developer and explorer. The company has an established operational
track record, with defined ore resources on the New Luika and
Singida projects in Tanzania, with reserves of 666 koz grading 3.0
g/t, and exploration licences covering approximately 1,100 km(2) in
the country. Alongside New Luika and Singida, Shanta also owns the
West Kenya Project in Kenya with high grade gold resources and
licences covering approximately 1,162 km(2) . With a strong balance
sheet, a growing diversified portfolio and a maiden dividend paid
in 2021, Shanta offers a resilient investment opportunity for the
near and long-term. Shanta is quoted on London's AIM market (AIM:
SHG) and has approximately 1,048 million shares in issue.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as amended by The
Market Abuse (Amendment) (EU Exit) Regulations 2019.
Q3 2021 PRODUCTION & OPERATIONAL UPDATE
Safety, Health and Environment
The Company extended its safety record during the Period with no
Lost Time Injuries ("LTI"), and the Company has now surpassed 7.5
million man-hours without an LTI. Shanta continues to operate as
one of the safest gold mining operations of its peers and had a
Total Recordable Injury Frequency Rate ("TRIFR") (per 1 million
hours worked) of 1.19 for Q3 (Q2: 1.76), significantly below the
industry average.
Shanta continues to adopt several best practices designed to
prevent the COVID-19 pandemic from entering NLGM and Singida.
Precautionary measures in place are robust, and these remain to
protect the health and wellbeing of our team and visitors, the
Company's highest priority. In Songwe, Shanta is educating
communities about the virus locally, where Health remains one of
the core pillars to Shanta's social responsibilities strategy.
Operational Summary - NLGM
Production Summary
Q3 2021 Q2 2021 Q1 2021 Q4 2020
Tonnes ore milled 223,338 200,511 191,767 181,425
-------- -------- -------- --------
Tonnes ore milled per
day 2,428 2,203 2,131 1,972
-------- -------- -------- --------
Grade (g/t) 2.23 2.49 2.67 3.91
-------- -------- -------- --------
Recovery (%) 88.6 88.6 89.1 90.4
-------- -------- -------- --------
Gold (oz)
-------- -------- -------- --------
Production 14,194 14,201 14,641 20,622
-------- -------- -------- --------
Sales 12,001 16,828 15,149 19,018
-------- -------- -------- --------
Silver production (oz) 17,748 16,870 17,360 26,544
-------- -------- -------- --------
Realised gold price (US$/oz) 1,790 1,812 1,801 1,376
-------- -------- -------- --------
Gold production during the period was 14,194 oz. Overall, a
total of 168,507 t of ore grading 2.9 g/t was mined from
underground in Q3 compared with 154,623-- t of ore grading 3.0 g/t
in Q2. A further 44,913 t ore grading 1.1 g/t was mined from open
pits in Q3 compared with 68,460- t of ore grading 1.0 g/t in Q2.
223,338 t of ore was milled during the period (Q2: 200,511t). The
ROM stockpile at the end of Q3 was 151,645 t of ore grading 1.05
g/t (--down from 158,458 t grading 1.05 g/t at the end of Q2).
Average recoveries of 88.6% were achieved in the plant during the
period (Q2: 88.6%).
Financial
Group EBITDA reduced to US$2.0 m (Q2: US$9.8 m). This was
primarily due to a reduction in gold ounces sold during the period.
A total of 12,001 oz was sold at an average price of US$1,790 /oz
against the average spot price for the quarter of $1,791 /oz (Q2:
16,828 oz sold at $1,812 /oz). EBITDA excluding expenditure at West
Kenya Project and Singida was US$6.5 m.
Adjusted Operating Costs of US$1,063 /oz and AISC of US$1,480
/oz were achieved in the Quarter respectively. This includes the
impact of US$145/oz of exploration costs at New Luika during the
quarter which is 59% higher than H1 and US$74/oz of sustaining
capital during the quarter relating to the bi-annual refurbishment
of the HFO gensets at the power station.
US$2.1 m of VAT receivables were received as a refund from the
TRA in the Period. The Company's Tanzanian VAT receivable increased
from US$27.4 m to US$27.7 m, the entirety of which is subject to
verification audit by the TRA before being available for further
offsets.
Capital expenditure at New Luika was US$5.5 m (Q2: US$3.6 m) for
the Quarter, which predominantly related to underground development
at BC, Luika and Ilunga.
Note: 1. EBITDA is earnings before interest, tax, depreciation
and amortisation which has been derived as operating profit
exclusive of depreciation/depletion of tangible assets and
amortisation of intangible assets.
Five-Year Production Plan
During the period Shanta announced a new five-year plan for its
gold assets in Tanzania, including New Luika Gold Mine and Singida
Gold Project.
Some of the highlights of the plan included reserve and resource
growth including:
o Gold reserves at NLGM of 423,000 oz grading 2.99 g/t, up from
382,000 oz grading 2.98 g/t as at 31 December 2020 (net of mining
depletion); and,
o Reserve-based mine life extended to 2026 at NLGM and 2029 at
Singida.
The plan also incorporates transformational production increases
from 2023 which have significant upside potential which
include:
o Group-wide gold production forecast from Tanzanian assets of
approximately 499,000 oz for the five-year period from H2 2021 - H1
2026;
o Average annual gold production from Tanzanian assets of
116,000 oz from 2023-2025; and,
o Potential conversion of 7.26 Mt grading 2.37 g/t for 552 koz
resources at NLGM and 9.78 Mt grading 2.11 g/t for 664 koz
resources at Singida currently sitting outside the Plan.
The plan also reflects Shanta's commitment to operating as a low
cost gold producer, reflected in the decreasing cost base forecast
between 2021-2025 with an average consolidated Adjusted Operating
Costs and All In Sustaining Costs of US$778 /oz and US$986 /oz
respectively over the plan period.
Singida Gold Mine
Construction of Singida Gold Mine advanced during the Period
with work on designs and manufacture of key project equipment and
infrastructure progressing well. The manufacture of a Crushing
Circuit for Singida's processing plant is progressing ahead of
schedule and instalments amounting to US$0.6 m were paid towards
this during the Period.
Onsite camp construction work has progressed, with key
infrastructure, including a medical clinic, mine accommodation
blocks, and a security offices being built. Fencing surrounding the
designated processing plant area has been completed along with
excavations of the Crushing Circuit foundation and other plant
infrastructure taking place. Further, 7 km of bulk water pipelines
have been installed.
The TSF design is nearing finalisation following the visit of
various Ministry of Water officials and Mine Commission Officials
during Q3. Final plans are due to be completed in Q4.
Headcount has been steadily increasing on site to meet Singida's
growing operational needs with recruitment of various skilled
workers from surrounding villages ongoing. This has been possible
due to the development of a database for skilled workers from
surrounding villages being created in Q2 to support local
recruitment wherever possible.
West Kenya
Investment in exploration at the West Kenya Project continues
and the number of drill rigs onsite increased to from two to three
during the Period. Following the completion of Phase 1 drilling of
9,383 metres through to 30 June 2021, the Company announced a
Resource Update for the Project with 117,600 oz grading 7.04 g/t
converted from Inferred to Indicated at a conversion rate of over
100% during the period. A further 994,000 oz of Inferred Resources
is being targeted during Phase 2 and 3 drilling for potential
conversion to Indicated category.
Assay results for 11 DD holes were received during the Period.
These comprised of 3 holes at Isulu, 8 holes at Bushiangala and 1
undisclosed hole. Highlights included:
o LCD0273 (Isulu) intersected 2.6 m grading 23.34 g/t Au;
o LCD0275 (Bushiangala) intersected 1.0 m grading 24.50 g/t
Au;
o LCD0277 (Isulu) intersected 1.0 m grading 529.90 g/t Au;
o LCD0279 (Bushiangala) intersected 0.6 m grading 16.10 g/t
Au;
o LCD0282 (Bushiangala) intersected 0.5 m grading 5.44 g/t Au;
and,
o "Undisclosed" intersected 3.90 m grading 63.80 g/t Au.
Exploration activities will continue throughout Q4 2021 with the
main focus being conversion of Inferred Resources to the Indicated
category.
Following a successful trial in March, an additional vocational
guard training programme for 50 individuals has been completed in
H2 2021 in partnership with KK Security, enhancing employment
opportunities for attendees. Shanta continues to be committed to
delivering a positive social impact for the communities in which it
operates.
Exploration - New Luika
Exploration drilling took place at the BC East Area 1 site,
which represents an extension of the main BC deposit and is located
approximately 2 km to the northwest of the NLGM processing plant.
Assay results were received during the Period with some promising
intersections identified.
During the Period, six exploration drill holes representing 1424
m were drilled at Luika and nine RC holes representing 1,194m were
drilled at Porcupine South western extension. Significant drill
hole intersections were identified and will form part of the next
exploration update.
Corporate Social Responsibility ("CSR")
Shanta is committed to supporting increased water access for
communities around NLGM. During the Quarter the Company was pleased
to attend the official commissioning and handover of the Patamela
Water Project, sponsored by Epiroc Tanzania and supervised by
Shanta. The Project successfully dug a 150 metre well, which has
the potential to supply approximately 30,000 litres of water per
day to residents. Shanta is looking for innovative ways to enhance
the projects it supports, and the bore hole is equipped with a
solar powered submersible pump and 20,000-litre storage tank.
Work progressed on the Mbangala Luika Dam water project, with
excavation to remove material and bury the water pipe completed
with the support of more than 200 residents from Mbangala village.
A submersible pump has been ordered and is expected to be installed
in Q4 with the official commissioning of the project following
shortly after. The project is hoped to provide more than 7,600
residents with year-round access to water.
The roads around NLGM are key for local transport however often
are in disrepair, exacerbated after each wet season where portions
are regularly washed away. Shanta met with local stakeholders from
Songwe to explore how to support the government with repairing a
section of nearby Zira Road. Following these discussions Shanta has
committed to provide materials and technical support to help mend a
broken riverbank. This is intended to offer a permanent solution
for this stretch of road.
Shanta is looking to expand on the number of local farmers
enrolled in the Company's farming initiative, which provides
training on modern agricultural methods, from approximately 1,500
to over 2,000. Training was conducted during the Period to five
Agricultural Marketing Co-Operative Societies (AMCOS) and sessions
at each were well-attended.
Post Period
First blast of mining material completed at Gold Tree deposit on
15 October 2021.
ENDS
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END
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