Shanta Gold Commences Production at New Luika Mine

PUBLISHED: Aug 20 2012 @ 09:50 | Comments (1) | More info about Kenneth G. Mondero

The long wait is over. Shanta Gold Limited (LSE:SHG) is finally on its way to produce between 13,000 and 17,500 ounces of gold from its New Luika Gold mine in Tanzania by the fourth quarter of 2012, the company said today.

Shares of the Shanta Gold, trading on the Alternative Investment Market, gained 11.4% to 30.625 pence by 3:00 PM GMT, following the announcement, which also stated the plant will have its first gold pour by the end of this month.

A New Gold Producer

After experiencing delays early this year, the Tanzania-focussed gold exploration company has now commenced extraction of the yellow metal. It can be recalled back in February that new importation laws in the East African country affected the delivery of equipment and materials needed in the mine and consequently moved the timeline. Security issues also contributed to the postponement of the commissioning of the plant.

Shanta Gold, nonetheless, continued stockpiling about 100,000 tonnes of ore estimated to contain over 13,000 ounces of the malleable metal. In June, wet commissioning of the plant was successfully completed and in July, a JORC-compliant resource estimate was announced, at 1.4 million ounces of gold at an average grade of 3.22 grams per tonne (g/t).

“We are delighted to have achieved the historic milestone of gold production at New Luika, which establishes Shanta Gold as the newest emerging gold producer in Tanzania,” Walton Imrie, Executive Chairman of Shanta Gold, said in a statement.

Cash Generation

Mr. Imrie also noted that the anticipated production also turns the company into a cash generative business. Shanta have been enduring working the mines without generating revenue – more like a case of delayed gratification. In fact, the company had not been making any profit at all since it enlisted on the Alternative Investment Market. Since 2005, Shanta had lost US$ 45 million.

The year 2012 is payback time for Shanta. With gold priced at over US$1,600 an ounce during the period, the miner is seeing between US$20 million and US$28 million gross revenue if it will be able to sell the anticipated volume of the precious metal.

Company Spotlight

Shanta Gold Limited is a Guernsey-incorporated gold exploration company focussing on Tanzania, where it holds three projects – the New Luika being its flagship.

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