Shanta Gold (AIM: SHG), the East Africa-focused gold producer, developer and explorer, announces its production and operational results for the quarter ended 31 March 2019 (the “Quarter”, “Q1” or the “Period”) for its New Luika Gold Mine (“NLGM” or “New Luika”), in South Western Tanzania.
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· Gold production of 22,374 ounces (“oz”), comfortably on track to meet annual guidance of 80,000−84,000 oz;
· All In Sustaining Costs (“AISC”)1 of US$701 /oz, significantly ahead of annual guidance of US$740-780 /oz;
· Cash operating costs of US$500 /oz;
· Net debt, excluding bullion available for sale, down to US$30.3 million (“m”) (Q4 2018: US$31.5 m), the strongest position in NLGM’s producing history;
· Projected to be in a net cash position by mid-2020;
· Healthy cash balance of US$8.4 m and total liquidity, excluding bullion available for sale, of US$10.9 m;
· Bullion available for sale of US$2.5 m, up from US$1.5 m at the end of Q4 2018;
· Tonnes (“t”) milled of 172,644 t, an all-time daily throughput record during the Quarter, continuing from significant step-up in plant throughput during Q4 2018;
· EBITDA of US$11.4 m;
· Underground exploration drilling underway at Bauhinia Creek (“BC”) Deep Central with high-grade mineralisation intersected under the existing reserves; results due in May;
· Ilunga underground development ore intersected and mined from March 2019, three months ahead of schedule;
· 5,753 t development ore mined at Ilunga to date, at an average grade of 6.02 g/t;
· Exceptional safety record with zero Lost Time Injuries (“LTI’s”); and,
· Singida to proceed with an Initial Public Offering (“IPO”) on the Dar es Salaam Stock Exchange (“DSE”) targeting a US$20 m minimum equity offering.
· Unrestricted cash balance of US$8.4 m (Q4 2018: US$9.0 m);
· Gross debt down four per cent (“%”) at US$38.7 m (Q4 2018: US$40.5 m);
· Net debt of US$30.3 m (Q4 2018: US$31.5 m);
· EBITDA of US$11.4 m (Q4 2018: US$9.9 m);
· AISC1 of US$701 /oz (Q4 2018: US$696 /oz);
· US$1.9 m drawn down from Exim Bank loan facility taking total drawn amount to US$7.5 m; and,
· VAT receivable increased to US$23.6 m (Q4 2018: US$21.8 m).
· Gold production of 22,374 oz in Q1, with high grade ore at BC underground continuing strong momentum from 2018;
· 172,644 t milled in Q1, an all-time daily throughput record during the Quarter and closely aligned with the all-time quarterly record 172,902 t milled in Q4 2018;
· Average head grade of 4.5 g/t for the quarter, 3% higher than average grades processed during 2018;
· ROM stockpile reduced to 139,000 t of ore grading 1.47 g/t following decision to stand-down higher cost open pit mining (Q4 2018: 163,194 t grading 1.48 g/t);
· First development ore from Ilunga reached on 10 March 2019 with first production stope expected in July 2019; and,
· Cost improvements continuing across the business including partial NLGM connection to state-operated (“TANESCO”) power grid to be commissioned at the end of 2019 and expected to provide US$7 /oz cost saving.
· Phase 1 drilling underway at BC Deep Central with over 350 metres planned for initial phase and completed in Q1, with assay results expected in May;
· Sampling and trenching underway at BC East and BC North targeting surface extensions at BC with results expected in May;
· Phase 2 drilling at BC Central scheduled for completion during Q2 in addition to further trenching at Lambo and Porcupine South targets; and,
· Engagements ongoing with independent consultants to review the Company’s substantial regional exploration portfolio.
Ilunga development update
· Ilunga underground development ore intersected in March 2019, three months ahead of schedule;
· Ilunga is now the third active source of high-grade ore at NLGM;
· 5,753 t development ore mined at 6.02 g/t for 1,115 oz contained gold;
· Installation of primary ventilation fan completed post period, with installation works carried out exclusively by 100% owner-managed team;
· Further 641 metres of development completed during Q1, with 1,259 m of development since portal blast; and,
· US$1.9 m spent on development in Q1; totalling US$5.2 m capex at Ilunga to date.
· Singida to proceed with a targeted US$20 m minimum equity offering via an IPO on the DSE subject to regulatory approval;
· The Company will retain at least 51% ownership of Singida and will operate the Project; and,
· Proposed IPO proceeds would finance the upfront capital required to bring the Project into production and provide additional funds for exploration.
Corporate Social Responsibility (“CSR”)
· Excellent progress made in local schools by “Into Africa – Partners in Learning”, the Company’s partnership providing teacher training in the Songwe region;
· Record exam results achieved by two participating schools within NLGM’s locality;
· Farmers enrolled in the Company’s agricultural collaboration with ETG Foundation have commenced first sesame harvests of 2019; over 800 farmers now enrolled; and,
· Public praise for Shanta garnered from newly appointed Minister for Minerals, encouraging industry peers to adopt Shanta’s practises.
· Annual guidance reiterated for 2018 of 80,000−84,000 oz at AISC1 of US$740-780 /oz.
· The Company announced on 10 April 2019 that it is proceeding with the buyback of approximately 33.33% of the outstanding convertible loan notes held by third parties. Following this the Company expects to have reduced the outstanding convertible loan note balance to US$9.8 m.
Note: 1. Development costs at the BC, Luika and Ilunga underground operations are not included in AISC.
Eric Zurrin, Chief Executive Officer, commented:
“I’m pleased to report on an exceptionally strong start to 2019. In terms of production we have had our best opening quarter in three years, achieved at costs well below our full year guidance whilst also remaining focused on our exploration objectives at New Luika to increase mine life.”
“Several milestones were achieved by the Company in the last three months. We produced our first development ore from Ilunga and are now mining from three active high-grade sources at New Luika. We also announced our intention to fund development of our second asset, Singida, through an IPO on the DSE. We have received encouraging initial feedback from institutional investors across East Africa to fund development of our second project and are confident in this strategy to bring the Project into production and provide additional funds for exploration.”
“This strong start to the year puts us in an excellent position to achieve full year guidance on both costs and production as well as to be in a net cash position midway through next year.”
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