Shanta Gold – now on track to become a 100,000 ounce per annum gold producer, shares set for an early rise ahead of more good news
The East Africa-focused gold producer, developer and explorer Shanta Gold (LON:SHG) has stated in its production and operational results for its first quarter of 2023 that the company had a positive start to the year.
The company has defined ore resources on the New Luika and Singida projects in Tanzania, with reserves of 625 Koz grading 2.9 g/t Au, and exploration licences covering approximately 800 km2 in the country.
Alongside New Luika and Singida, Shanta also owns the high-grade West Kenya Project in Kenya with resources of 1.76 Moz including 0.72 Moz in the Indicated category grading 11.45 g/t Au, and exploration licences covering 580km2 containing multiple highly-prospective targets.
First Quarter 2023
Gold production during the period was 15,317 oz.
Production was impacted in February by underground equipment availability which was restored last month and operational challenges faced due to excessive water from unexpected levels of rainfall in the month which impacted the crusher and haulage of mined physicals.
During the first quarter, the company resolved to install a pre-leach thickener at its New Luika Gold Mine targeting an improvement in gold recoveries supported by an attractive payback period.
The thickener project will commence next month with commissioning expected in Q1 2024.
The group reported that on 30 March it had the first gold pour at its new Singida Gold Mine.
Ramp-up at Singida is reported to be progressing well, including 2,200 oz produced and 16,000 tonnes milled in the first 22 days of April 2023.
Declaration of Singida commercial production, Singida 2023 guidance and Singida 5-year mine plan is expected to be communicated later in Q2 2023.
Elsewhere the group reported that the New Luika Gold Mine Q1 production was 15,317 oz; while it has updated its West Kenya Project mineral resource estimate to 1.76 Moz grading 5.55 g/t Au; leaving group total resources being updated to 3.67 Moz grading 3.28 g/t Au.
At the end of Q1 the group had cash and available liquidity of $11.5m, down from $13.0m at the end of Q4 2022.
CEO Eric Zurrin stated that:
"I am pleased to report a strong start to 2023, with first gold pour at our new Singida Gold Mine taking place on the 30th of March.
As a result, Shanta is now a 100,000-ounce-per-year gold producer with a diversified resource base, a de-risked balance sheet, and significantly more financial flexibility.
Ramp-up at the site is progressing well, with 2,200 ounces produced in the first 22 days of April 2023, and we expect to announce our 2023 production guidance and five-year plan in this quarter.
Meanwhile, our balance sheet remains healthy positioning us well to unlock further long-term value for our shareholders for the remainder of the year."
Analyst Opinion – Target Price 30p
Joint broker Tamesis Partners rates the group’s shares highly with a Target Price of 30p, based upon its valuation of 41p a share on a gold price calculation at $1800 an ounce.
Conclusion – an early 50% price gain at least
Ahead of further corporate reports on the Singida commercial production, then its 2023 guidance and 5-year Mine Plan, coupled with reports on its West Kenya Project and drilling at NLGM – the news machine at Shanta will be busy over the next few months.
With a strong balance sheet, a growing diversified portfolio and consistent dividend payments, the £136m capitalised Shanta Gold offers good upside, with its shares at just 13p.