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Shanta Gold on growth path as gold prices buoy prospects

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18237500 - businessman hand pointing to investment as concept

How it’s doing

In October, Shanta raised gross proceeds of £32.2mln (approximately US$42.1mln) through the issue of an aggregate of 194,884,309 new ordinary shares at a price of 16.5p each. 

The exploration group said that, as a result of the significant demand generated during the bookbuild process, the participants in the placing agreed on a pro-rata basis to take part in a secondary trade to acquire 54,650,211 ordinary shares owned by Barrick Gold Corporation at the issue price.

The Barrick shares represent 6.4% of the company’s existing issued share capital.

Following completion of the secondary trade Barrick Gold will no longer have any beneficial interest in Shanta’s ordinary shares, the group noted. 

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

Shanta believes the portfolio of high-quality reserves has a pathway to organically grow to a plus 220,000 per annum producer.

Singida float

Plans to float its Singida gold mining asset in Tanzania on the Dar es Salaam stock exchange are progressing.

The gold miner wants to raise US$20mln to develop Singida, with the IPO documents now lodged with the Tanzanian authorities.

Shanta will retain at least 51% ownership of Singida and will operate the project with the money to be used to start production and for exploration to expand the resource.

Newly published project economics suggests production will average 26,000oz per annum for an initial six-year period.

 

Executive interview – CEO Eric Zurrin 

 

Inflexion points

  • Details of Singida IPO
  • 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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