Shanta Gold (AIM: SHG), the East Africa-focused gold producer, announces its unaudited interim financial results for the six months ended 30 June 2021 (“H1” or the “Period”). The Company’s asset portfolio includes New Luika Gold Mine (“NLGM” or “New Luika”) and Singida Project (“Singida”) in Tanzania and West Kenya Project (“West Kenya”) in Kenya.
H1 2021 HIGHLIGHTS
· Revenue of US$57.8 million (“m”) (H1 2020: US$73.0 m);
· EBITDA1 of US$17.4 m (H1 2020: US$27.5 m);
· Profit before taxation of US$8.6 m (H1 2020: US$15.3 m);
· Profit after taxation of US$3.1 m (H1 2020: US$1.0 m);
· Maiden final dividend of 0.10 pence per share paid in April 2021, with an interim dividend proposed of 0.10 pence per share, payable in October 2021;
· Operating cash flow before movement in working capital of US$16.6 m (H1 2020: US$29.8 m);
· Group wide exploration spend of US$4.6 m (H1 2020: US$1.4 m);
· Capital expenditure of US$11.5 m (H1 2020: US$7.4 m);
o Including Singida capital development spend of US$3.8 m (H1 2020: Nil)
· Net cash2 of US$24.2 m (FY 2020: US$37.3 m);
· Gross debt of US$0.8 m (FY 2020: US$11.4 m);
o Convertible loan notes and debt facility with Exim Bank repaid in full;
· VAT receivable due to the Company of US$27.4 m (FY 2020: US$27.6 m);
o US$4.2 m offset against H2 2020 corporation tax liability in the Period;
o US$2.1 m cash VAT refund received post Period;
· All In Sustaining Costs (“AISC”) of US$1,338 /oz (including US$177 /oz in relation to development costs) in line with reiterated annual guidance of US$1,325 – 1,375 /oz; and,
· Shanta has engaged an external consultant to assist with the preparation of its 2021 Sustainability Report, which is expected to be published later this year and will detail our ambitions for increasing the Company’s positive impact in the future.
· Gold production of 28,842 oz (H1 2020: 42,383 oz);
· No lost time injuries (“LTI’s”) during the Period, with zero LTI’s since Q4 2017;
· Precautionary measures in place to reduce the risks posed by COVID-19; and,
· Reiterated annual production guidance for 2021 of 60,000 – 65,000 oz.
· Phase 1 drilling programme completed with highly encouraging assay results received;
· Third drill rig to be on site by the end of August and Phase 2 drilling is underway;
· Resource update expected to be released in September, focused on approximately 10% of the total NI43-101 Inferred resource of 1.2 Moz between 0-200 metres in depth;
· The Company is supporting a local project subsidising National Hospital Insurance Fund (“NHIF”) subscriptions for 300 low-income women local to the West Kenya Project; and,
· Vocational security guard training for 50 participants in partnership with a local security company, with a second programme now underway.
· Mine construction progressing with detailed designs and tenders for key infrastructure ongoing;
· Manufacture of the Ball Mill underway;
· US$2.0 m paid towards manufacture of the Crushing Circuit, which is nearing completion;
· Onsite works continue with bush clearance and installation of mine infrastructure underway; and,
· Pre-stripping due to commence in Q3 2021.
Exploration – New Luika
· Assay results received from the Luika deposit added 76,461 oz of new Indicated resources grading 7.97 g/t;
· Resource block model update for BC East Area 1 added 39,786 oz of new Indicated resources grading 4.74 g/t, announced post Period; and,
· In aggregate, results from the two targets added 116,247 oz of new resources at NLGM (before depletion) grading 6.47 g/t, at a cut-off grade of 1.0 g/t Au.
· Interim dividend of 0.10 pence per share proposed, payable on 29 October 2021. The associated record date is 8 October 2021 and the ex-div date is 7 October 2021.
· Shanta announced a new five-year plan (“the Plan”) for its gold assets in Tanzania on 19 July 2021, including a reserves and resources update for NLGM;
· The Plan forecasts group-wide gold production from Shanta’s Tanzanian assets of approximately 499,000 oz for the five-year period from H2 2021 – H1 2026; and,
· US$2.1 m cash VAT refund received post Period.
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.
Note: 2. Net cash includes liquidity available from 65 oz unsold at the refinery at 30 June 2021 (FY 2020: 75 oz unsold at the refinery and 3,701 oz in transit).
Note: 3. Available liquidity has been derived as unrestricted cash plus the sale value of bullion available for sale at the end of the Period (net of royalties and expected selling costs).
Eric Zurrin, Chief Executive Officer, commented:
“Shanta’s exploration success during H1 has generated new high-grade resources at Luika and BC East Area 1. West Kenya is also proving to be 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. We continue to be excited by the prospects of West Kenya and we look forward to announcing a Resource Update in September.
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, and I’m delighted to announce an interim dividend of 0.10 pence per share proposed for payment in October 2021. We are also pleased to confirm that we have received US$4.2 million in VAT offsets during H1 and a further $2.1 million VAT cash refund post Period as we work with the Tanzanian government to clear the outstanding balance.
Our new five-year plan outlines our strategy to transform the business into a 110,000+ ounces gold producer by 2023. 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.”
Shanta Gold Limited
Eric Zurrin (CEO)
+44 (0) 14 8173 2153
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 km2 in the country. Alongside New Luika and Singida, Shanta also owns the West Kenya Project in Kenya with defined inferred resources of 1.2 Mt grading 12.6 g/t and licences covering approximately 1,162 km2. 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.
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