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Shanta Gold on growth path as gold prices buoy prospects


How it’s doing

In October, Shanta raised gross proceeds of GBP32.2mln (approximately US$42.1mln) through a heavily oversubscribed share issue priced at 16.5p per share.

The New Luika mine in Tanzania, meanwhile, produced 19,973 ounces of gold during the third quarter of 2020.

Shanta believes its portfolio of high-quality reserves, that now include the Singida and West Kenya prospects. has a pathway to grow organically to produce in excess of 220,000oz per annum.

At Singida, also in Tanzania, Shanta has taken the decision to fund the development of the mine from its own cashflow and construction work has started.

The reserve-based mine plan gives a post-tax net present value (NPV) at 8% of US$73mln, an increase of US$25mln since the previously published estimate of US$31mln in December 2018.

Singida will increase Shanta’s group production to 110,000 ounces in the first full year of operation.

The miner said the total capital investment will be US$26mln over a 24-month construction period, excluding pre-stripping.

West Kenya

A scoping study for the assets (recently acquired from Canadian giant Barrick) indicated an operation that will produce 949,000 ounces over the life of the mine at an all-in sustaining cost of US$850 per ounce, inclusive of pre-production costs.

Cash costs were set at US$582 per ounce and the cost to construct the mine was pegged at US$161mln.

Overall, the project should generate US$118mln in earnings annually, with the internal rate of return ringing in at a punchy 110% and helped along by the average head grade of 9.3 grams per tonne.

Executive interview – CEO Eric Zurrin

Inflexion points

  • Singida comes on stream
  • Development of capacity at New Luika
  • Gold price continues to rise

What the broker says: Liberum

Shanta has the potential to double in value over the next twelve months according to a punchy update from broker Liberum.

The Africa-focused gold miner recently raised US$41mln in a modestly discounted placing that will facilitate prompt development of the highly attractive West Kenya project under any gold price scenario, added the broker.

“With this raise, Shanta has effectively de-risked its exploration plans at the West Kenya project under any gold price scenario.

“Just on the existing resource, West Kenya is a game-changer for Shanta with the scoping study estimating an NPV of US$340mln and the bulk of proceeds will be used to prove up the identified potential over the next three years.”

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