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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Shanta Gold Limited | LSE:SHG | London | Ordinary Share | GB00B0CGR828 | ORD 0.01P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.01 | 0.07% | 14.75 | 14.70 | 14.80 | 14.79 | 14.70 | 14.70 | 5,259,744 | 08:00:12 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Gold Ores | 114.06M | -2.3M | -0.0022 | -67.05 | 155.09M |
From Apr 2019 to Apr 2024
TIDMSHG
RNS Number : 2643A
Shanta Gold Limited
23 March 2017
23 March 2017
Shanta Gold Limited
("Shanta Gold", "Shanta" or the "Company")
New Luika Gold Mine Revised Mine Plan and Reserves Update
Shanta Gold (AIM: SHG), the East Africa-focused gold producer, developer and explorer, is pleased to announce a Revised Mine Plan from January 2017 to December 2023 (the "Plan") and updated reserves statement for its New Luika Gold Mine ("NLGM"), in Southwest Tanzania.
Highlights:
-- 39% increase in forecast mine gold production from 2017-2023 from 359,000 ounces ("oz") to 500,000 oz;
Hot Features
Premium
-- Four-year extension of the maximum utilisation of the NLGM plant based on current reserves;
-- Average production from 2017 to 2020 of 85,200 oz per annum ("pa");
-- The Plan's average Cash Cost and All In Sustaining Cost ("AISC") are US$577 /oz(1) and US$736 /oz(2) respectively;
-- Significant further upside through the inclusion of substantial resources that currently still sit outside the Plan;
-- Net Present Value ("NPV") for the Plan from January 2017 of US$123 m at an 8% discount rate and a gold price of US$1,200 /oz; and
-- Shanta remains on track to achieve full year guidance for 2017 of 80,000 - 85,000 oz at AISC of US$800 - US$850 /oz.
Revised Mine Plan
-- The Plan provides for underground mining, surface mining and a tailings recovery project;
-- The Plan now incorporates the additional open pit reserves at Elizabeth Hill and additional underground reserves at Ilunga;
-- The Plan provides for processing from underground and surface mining of 4.0 million tonnes ("Mt") of ore at an average grade of 4.2 grams/ tonne ("g/t") for the production of 500,000 oz from January 2017 to 2023;
-- Underground operations accessing high grade orebodies provide the majority of plant feed with 2.4 Mt at 5.8 g/t for 444,500 oz contained over the life of the mine;
-- A separate tailings recovery project scheduled from 2019 will produce a further 14,600 oz with a standalone project NPV of US$2.8 million ("m") at an 8% discount rate and a pre-tax Internal Rate of Return ("IRR") of 39%; and
-- Potential remains to further optimise the mine schedule, with optionality through the addition of the high grade Ilunga underground reserve.
Ilunga Reserves and Feasibility Study
-- Defined reserves of 660,500 tonnes at a grade of 5.6 g/t for 118,000 oz contained; and,
-- Underground Feasibility Study (incorporated within the Plan) demonstrates a project NPV of US$42 m at an 8% discount rate and gold price of US$1,200 /oz, with a pre-tax IRR of 129%.
Updated NLGM Reserves
-- Total reserve of 3.64 Mt at 4.4 g/t for 515,500 oz contained(3) ; -- Open Pit reserves of 1.26 Mt at 1.8 g/t for 71,000 oz contained(3) ; and, -- Underground reserves of 2.39 Mt at 5.8 g/t for 444,500 oz contained(3) .
Comparison to Base Case Mine Plan (September 2015)
Shanta released its Base Case Mine Plan ("BCMP") in September 2015. Taking into account actual performance of the NLGM for the 2016 year and comparing on a like for like basis, the Plan will contribute:
-- 33% increase in gold production with recovered gold now 587,500 oz, up from 443,000 oz; -- 67% increase in milled tonnes at 4.6 Mt in the Plan vs 2.8 Mt in the BCMP;
-- Average annual production between 2016 and 2020 increases from 84,000 oz p.a. to 85,700 oz p.a.;
-- The 362,000 tonnes of vacant mill capacity in the BCMP between 2017 and 2020 has been filled with the additional reserves from Elizabeth Hill and Ilunga;
-- Mill feed now only reduces below full capacity in 2023, 2019 previously, with options from on-going exploration expected to further enhance and extend the Plan in the future;
-- An extended maximum utilisation of the plant by a full four years provides optionality in production as additional reserves become available;
-- Underground reserves increased from 1.8 Mt at 5.84 g/t for 344,000 oz to 2.4 Mt at 5.8 g/t for 444,500 oz with the addition of the Ilunga reserve;
-- Open pit reserves replenished from 0.96 Mt at 4.96 g/t for 147,000 oz to 1.26 Mt at 1.76 g/t for 71,000 oz (after accounting for 16 month's reserve depletion through production to 31 December 2016) with the addition of the Elizabeth Hill reserve and with the benefit of lower open pit mining costs; and
-- NPV from the Plan including free cashflow from 2016 is US$127 m compared to US$110 m in the BCMP. With US$52 m capital already spent, including US$4 m of prepayments and with tangible development in place, the project is substantially de-risked.
Exploration and Future Potential at New Luika
-- Total resources that presently sit outside of the Plan amount to 9.47 Mt at 2.24 g/t for 683,000 oz(3) ;
-- These resources, which can potentially benefit from further exploration, have been prioritised for further evaluation and have the advantage that all sit within the current mining license with close proximity to processing plant;
-- The high-grade underground deposits are open at depth and carry significant inferred resources that will be further explored; and
-- Exploration is taking place in Prospecting Licenses surrounding the New Luika mining licence. By way of example, the prospect at Nkuluwisi, for which drilling results were recently announced over a strike length of 900 metres, would be expected to contribute to the future production from the NLGM process facility.
(1) Cash Cost - Back of mine operating and administrative costs excluding royalty
2AISC - Cash cost plus royalty, stay in business capital expenditure, interest and G & A
3Using a US$1,200 /oz gold price and cut-off grades of 1.0 g/t for open pits and 3.0 and 3.5 g/t for long-hole open stoping and overhand cut-and-fill underground production respectively.
CFO appointment
Shanta is pleased to announce the return to the Company of Eric Zurrin as its permanent Chief Financial Officer ("CFO"). Eric is very familiar with Shanta having worked with the Company in 2013 and most recently as Interim CFO leading the financial restructuring that was completed in May 2016.
Analyst conference call and presentation
Shanta Gold will host an analyst conference call and presentation today, 23 March 2017, at 09:30 GMT. Participants can access the call by dialling one of the following numbers below approximately 10 minutes prior to the start of the call.
UK Toll-Free Number: 080 8237 0030 UK Toll Number: +44 (0) 20 3139 4830
PIN: 59770255#
The presentation will be available for download from the Company's website: www.shantagold.com or by clicking on the link below:
http://www.anywhereconference.com?UserAudioMode=DATA&Name=&Conference=131685151&PIN=59770255
A recording of the conference call will subsequently be available on the Company's website.
Toby Bradbury, Chief Executive Officer, commented:
"The Revised Mine Plan highlights the true prospectivity and future long life of the New Luika Gold Mine. The Plan provides for a longer mine life, increased production and most importantly, greater returns for all Shanta stakeholders.
"Considerable depth has been added to an already robust business case due to our delivery over the past 18 months and we will look to extend the planning horizon for the New Luika operation again in future.
"We will continue to explore on-mine to bring existing indicated and inferred resources into the future mine plan and also in surrounding prospecting tenements to define new resources. Since the Base Case Mine Plan was published in September 2015, the Elizabeth Hill and Ilunga Reserves have been successfully proven and incorporated into the Revised Mine Plan. We will take the same approach following positive results recently announced at the Nkuluwisi prospect, and with the highly prospective ground we hold in the Lupa Goldfield.
"I express my appreciation for the entire team that continues to deliver innovative solutions that really enhance shareholder value."
New Luika Gold Mine - Revised Mine Plan Context
The Plan is the culmination of a process that updates the September 2015 BCMP to incorporate:
-- Additional open pit reserves at Elizabeth Hill, announced in January 2016;
-- Additional underground reserves at Ilunga, defined as part of this announcement, and announced as a resource in September 2016;
-- Lower operating costs in the open pit operations; -- Optimised mine plans for Bauhinia Creek and Luika underground, relative to the BCMP; and, -- Reconciliation with depleted reserves as at 31 December 2016.
The future of NLGM is built on the foundation of high grade ore, predominantly from Bauhinia Creek deposit but also from Luika, and now Ilunga as well. While Ilunga will continue to operate as an open pit until mid-2017, the surface reserves at Bauhinia Creek and Luika pits were depleted in 2016. A significant stockpile of high grade ore was created in 2016 to tide the operation through the transition from surface to underground mining.
From a gold production perspective, this transition has gone well and according to plan. In 2016, New Luika was able to exceed its guidance of 82-87,000 oz with 87,713 oz produced. In the meanwhile, the underground development of the deposits at both Bauhinia Creek and Luika have progressed on target. At the time of writing, more than 2.1 kilometres of underground development have been completed, excluding two 80 metre ventilation raises that have been established in Bauhinia Creek and a third at Luika that is underway. The third level of ore development is underway in Bauhinia Creek.
Surface infrastructure to support the underground including power, water, pumping, workshops, change house, lamproom, rescue facilities and offices are all established. Main ventilation fans and Cement Rock Fill ("CRF") batching plant are projects that are in progress and will be delivered over the next two quarters. The underground mine is running as an owner-miner operation with our own mining equipment.
Gold production for Q1 2017 to date is in line with expectations and our full year guidance of 80-85,000 oz.
An optimisation study for both Bauhinia Creek and Luika undergrounds has been conducted reducing the quantum of development required and improving the certainty of ore supply. In the case of Luika, a shift away from cut and fill in favour of leaving lower grade pillars has enhanced the economics.
Mine infrastructure that has been delivered or is nearing completion is also incorporated into the Plan. In January 2017, NLGM switched over to its own new purpose-designed 7.5 MW HFO fueled power facility which is now in commercial operation. In 2016, NLGM completed the construction of a 350 Ml capacity dam on the Luika River which, together with other storage capacity already in place and a modest water-make from underground, provides process water security through the dry season. Finally, the new Tailings Storage Facility, providing eight year's capacity at current production, will be commissioned in Q2 2017. These projects were all included as part of the BCMP and have now effectively been delivered as part of the commitments made.
An expansion of the 63 kW pilot solar power plant that has been operating for the past two years to 700 kW is due to be completed in Q2 2017 and will assist further reduce power costs while at the same time reducing our carbon footprint. The plant is provided on a rental basis.
The above projects that have been delivered and expensed to date substantially de-risk the operation relative to the position when the BCMP was announced.
Revised Mine Plan (the Plan)
The strategy for NLGM is to maximise value and mine life through the inclusion of additional resources and reserves within and around the mining license. For the purposes of the Plan, at this stage all reserves incorporated in the Plan are within the existing mining licence areas.
From 2017, NLGM will be a blend of underground mining of high grade ores and smaller scale surface mining of lower grade resources. The Plan provides for mining extraction of 3.64 Mt for the production of 515,500 contained oz from January 2017 to 2023 with 71,000 oz (14%) from open pit and 444,500 oz (86%) from underground. The balance of process feed ore comes from stockpiles, gravels and mineralized waste, totaling 11,500 contained oz.
Underground mining is from Bauhinia Creek, Luika and Ilunga to depths below surface of 350 metres, 315 metres and 250 metres respectively. Mining methods are predominantly long hole open stoping with back fill where warranted.
Surface mining is at Ilunga, Jamhuri, Shamba and Elizabeth Hill. At this stage, Black Tree Hill deposit is not included in the Plan.
Under the Plan, the process plant achieves full capacity utilisation through to 2022. It is expected that additional resources from the existing portfolio of opportunities within the mining licence and the Company's surrounding exploration licences will provide further mine life and optionality to NLGM.
A separate tailings recovery project produces a further 14,600 oz with a project NPV of US$2.8 m (at an 8% discount rate) and a pre-tax IRR of 39%.
Gold production from 2017 to 2020 averages 85,200 oz p.a. (84,000 oz p.a. in the BCMP) with opportunities to optimise future years with additional resources and reserves as they are defined.
A summary of the key metrics of the NLGM Plan is provided below. The key assumptions are as detailed for the Ilunga Reserve.
Revised Mine Plan Period: 2017-2023 Summary -------------------------- --------------------- Open pit and underground 3.64mt at 4.4g/t for reserve 515,500oz contained -------------------------- --------------------- Projected mine life 7 years -------------------------- --------------------- NPV at 8% US$123 m -------------------------- --------------------- Total capital expenditure US$68 m(1) over project life -------------------------- --------------------- Life of Mine Cash US$577 /oz Cost -------------------------- --------------------- Life of Mine AISC US$736 /oz -------------------------- ---------------------
(1) Excluding US$4 m of payments spent in 2016
There remains considerable scope to optimise the mine plan through further review of operating parameters as well as through the definition of additional resources.
NPV Discount Rate Sensitivity (US$m)
Gold price Discount rates
-------------- -------------------
5% 8% 10%
-------------- ----- ----- -----
US$1,100 /oz 101 88 81
-------------- ----- ----- -----
US$1,200 /oz 139 123 114
-------------- ----- ----- -----
US$1,300 /oz 178 158 147
-------------- ----- ----- -----
PRODUCTION 2017 2018 2019 2020 2021 2022 2023 Total
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Open Pit
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Material
Mined tonnes 3,664,366 - 863,355 1,498,385 1,203,549 909,556 - 8,139,211
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Ore Mined tonnes 376,894 - 143,653 233,530 223,891 276,858 - 1,254,825
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Strip
Ratio x 8.8 - 5.0 5.6 4.5 2.3 - 5.6
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Grade g/t 2.45 - 2.10 1.29 1.20 1.49 - 1.76
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Contained
Gold koz 29,694 - 9,710 9,711 8,604 13,235 - 70,954
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Underground
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Ore Mined tonnes 217,978 527,911 546,478 336,486 347,726 256,616 156,296 2,389,490
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Grade g/t 7.41 5.93 5.64 5.52 5.53 5.70 4.85 5.79
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Contained
Gold koz 51,899 100,601 99,121 59,694 61,820 47,033 24,354 444,522
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Low grade
material
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Ore Mined tonnes 37,748 41,516 9,907 64,217 22,773 - - 176,161
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Grade g/t 1.83 2.03 1.42 1.77 3.30 - - 2.39
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Contained
Gold koz 2,225 2,715 453 3,657 2,414 - - 11,463
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Total
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Ore Mined tonnes 632,620 569,427 700,038 634,233 594,390 533,474 156,296 3,820,476
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Grade g/t 4.12 5.64 4.86 3.58 3.83 3.51 4.85 4.17
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Contained
Gold koz 83,818 103,316 109,285 73,061 72,837 60,269 24,354 526,939
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Processing
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Tonnes
Milled tonnes 603,254 604,440 604,440 606,096 604,000 604,000 401,470 4,027,700
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Head Grade g/t 4.56 4.86 4.99 4.73 3.72 3.39 2.96 4.22
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Recovery % 91.5% 91.7% 91.8% 91.5% 90.3% 90.3% 90.1% 91.5%
---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ---------- Mine Gold Produced koz 80,593 86,718 89,061 84,375 65,268 59,427 34,421 499,864 ---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ---------- Tailings Gold Produced koz - - 2,912 2,912 2,912 2,912 2,912 14,559 ---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ---------- Total Gold Produced koz 80,593 86,718 91,973 87,287 68,180 62,339 37,333 514,422 ---------------- -------- ---------- -------- -------- ---------- ---------- -------- -------- ----------
Capital and Finance
A summary of operating costs is provided below.
COSTS 2017 2018 2019 2020 2021 2022 2023 Total ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ------ Open Pit Mining $/oz 539 - 502 636 755 - - 543 ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ------ Underground Mining $/oz 235 243 256 371 316 212 270 270 ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ------ Processing $/oz 169 157 161 167 213 233 292 187 ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ------ G&A $/oz 142 112 106 105 127 86 72 110 ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ------ By-product Credit $/oz (3) (3) (3) (3) (3) (3) (3) (3) ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ------ Royalty & Selling $/oz 61 60 60 60 60 60 60 60 ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ------ Other (SIB, Int, Corp) $/oz 174 128 92 79 75 54 45 99 ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ------ Cash Operating Cost $/oz 629 562 566 566 681 481 520 577 ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ------ AISC $/oz 864 751 718 705 816 596 626 736 ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ------
(1) The 2017 estimate for Group AISC and Cash Cost includes ounces from Singida which are not reflected in the table. Group AISC guidance is US$800- US$850 /oz in 2017.
A summary of capital expenditure is summarised below.
Capital Expenditure 2017 2018 2019 2020 2021 2022 2023 Total --------------------- ------- ------- ------- ------ ------ ----- ----- ------- UG Capital Devlpt 20,114 7,322 982 4,714 1,310 - - 34,442 --------------------- ------- ------- ------- ------ ------ ----- ----- ------- Open Pit Mines Devlpt 1,667 - 797 1,035 241 - - 3,741 --------------------- ------- ------- ------- ------ ------ ----- ----- ------- Power Plant Uprate(1) 2,542 - - - - - - 2,542 --------------------- ------- ------- ------- ------ ------ ----- ----- ------- Luika River - - - - - - - - Dam --------------------- ------- ------- ------- ------ ------ ----- ----- ------- TSF 2 Phase 1 3,460 - - - - - - 3,460 --------------------- ------- ------- ------- ------ ------ ----- ----- ------- TSF 2 Phase 2 - 2,000 - - - - - 2,000 --------------------- ------- ------- ------- ------ ------ ----- ----- ------- Plant Uprate Phase 1 540 - - - - - - 540 --------------------- ------- ------- ------- ------ ------ ----- ----- ------- Tailings Retreatment - 3,244 673 - - - - 3,917 --------------------- ------- ------- ------- ------ ------ ----- ----- ------- Singida PFS - - - - - - - - --------------------- ------- ------- ------- ------ ------ ----- ----- ------- Exploration - NLGM 1,846 - - - - - - 1,846 --------------------- ------- ------- ------- ------ ------ ----- ----- ------- Stay in business/ Other 2,855 400 300 - - - - 3,555 --------------------- ------- ------- ------- ------ ------ ----- ----- ------- Ilunga UG Capital Devlpt - 2,913 7,400 1,888 - - - 12,201 --------------------- ------- ------- ------- ------ ------ ----- ----- ------- Total 33,024 15,879 10,151 7,638 1,551 - - 68,244 --------------------- ------- ------- ------- ------ ------ ----- ----- -------
(1) 2017 excludes US$4.1 m of prepayments paid in 2016 for the Power Plant Uprate
Ilunga Reserve Statement and Feasibility Study
The addition of the Ilunga underground reserve adds significantly to the Plan. The Ilunga underground Feasibility Study has been completed for the extraction of 660,500 tonnes at a grade of 5.6 g/t for 118,000 oz contained. The Ilunga underground will employ long hole open stoping mining methods and will utilise the existing mining fleet purchased for Bauhinia Creek and Luika underground. Pre-production capital required of US$8.5 m including contingency which is expected to be funded from cash flow. The project NPV at an 8% discount rate and gold price of US$1,200 /oz is US$42 m, with a pre-tax IRR of 129%.
The key parameters for the Ilunga Underground project are:
Ilunga Underground Project Summary ---------------------------- ------------------- Underground reserve 660,500t at 5.6g/t (Probable category) for 118,000oz ---------------------------- ------------------- Average annual production 21,500 oz ---------------------------- ------------------- Projected mine life 5 years ---------------------------- ------------------- NPV at 8% US$41.9 m ---------------------------- ------------------- Project IRR (pre-tax) 129% ---------------------------- ------------------- Pre-production capital US$8.5 m expenditure ---------------------------- ------------------- Total capital expenditure US$12.2 m over project life ---------------------------- ------------------- Payback period 2 years ---------------------------- ------------------- Life of Mine Cash Cost US$508 /oz ---------------------------- ------------------- Key assumptions: --------------------- ------------------ Gold price US$1,200 /oz --------------------- ------------------ Processing recovery 91% --------------------- ------------------ Diesel price US$0.86 per litre --------------------- ------------------ HFO price US$0.67 per litre --------------------- ------------------
The planned underground mining operation is low tonnage, with access from a portal in the Ilunga Pit in the south west corner. This has already been incorporated into the pit design and will require minimal footwall ramp development. Mining methods will be long-hole open-stoping with backfill. Final depth of mining based on current reserves is planned to 250 metres below surface
A cut-off grade of 2.6 g/t has been utilised for this high-grade deposit. There are lower grade areas that currently fall outside the plan but which could be mined with no additional development thereby providing gold price optionality.
NLGM Reserves
The total reserves position for NLGM as at 31 December 2016 is given below:
Deposit and classification Ore Ore Contained Recoverable
tonnes grade Ounces Ounces
(kt) (g/t (koz) (koz)
Au)
---------------------------- -------- ------- ---------- ------------
Total Ore Reserves
- Underground 2,389 5.79 445 405
---------------------------- -------- ------- ---------- ------------
Total Ore Reserves
- Open Pits 1,255 1.76 71 65
---------------------------- -------- ------- ---------- ------------
Total Ore Reserve
- Open Pits +
Underground 3,644 4.40 515 470
---------------------------- -------- ------- ---------- ------------
Underground Reserves
The underground reserve statement is shown below:
Deposit and Ore tonnes Ore grade Contained Recoverable
classification (kt) (g/t ounces Ounces
Au) (koz) (koz)
----------------- ----------- ---------- ---------- ------------
Bauhinia
Creek
----------------- ----------- ---------- ---------- ------------
Probable
Reserve 1,263 6.24 253 230
----------------- ----------- ---------- ---------- ------------
Luika
----------------- ----------- ---------- ---------- ------------
Probable
Reserve 466 4.88 73 66
----------------- ----------- ---------- ---------- ------------
Ilunga
----------------- ----------- ---------- ---------- ------------
Probable
Reserve 660 5.56 118 107
----------------- ----------- ---------- ---------- ------------
Total Ore
Reserve 2,389 5.79 445 405
----------------- ----------- ---------- ---------- ------------
1. The Ore Reserve for Bauhinia Creek and Luika underground is reported in accordance with the JORC Code 2012.
2. The Ore Reserve estimate is based on utilising underground mining methods of long-hole open-stoping, and cut-and-fill. A cut-off grade of 3.0 g/t Au is applied to long-hole open-stoping areas and a cut-off grade of 3.5 g/t Au is applied in cut-and-fill areas, at Ilunga a cut-off grade of 2.6g/t Au has been applied to the long hole open stoping operation. Economic evaluations are at a gold price of US$1,200 /oz. Ore processing is through the existing New Luika processing plant at a gold recovery of 91%.
3. The Competent Person for the Ore Reserve is Keith Marshall. The Ore Reserve was estimated from Indicated Resources prepared by Sphynx Consulting.
4. JORC Code Table 1 for the underground Ore Reserve is appended to this statement.
Underground reserves have increased predominantly due to the inclusion of the Ilunga reserve discovered subsequent to the last reserve statement in 2015.
Open Pit Ore Reserves
The change to the open pit reserves since the last Reserve Statement of September 2015 is due to depletions, the inclusion of the expanded resource at Elizabeth Hill and revised economics achieved with lower open pit mining costs.
Deposit and classification Ore tonnes Ore grade Contained Recoverable
(kt) (g/t Au) Ounces (koz) Ounces (koz)
---------------------------- ----------- ---------- -------------- --------------
Bauhinia Creek OP
---------------------------- ----------- ---------- -------------- --------------
Probable Reserve - - - -
---------------------------- ----------- ---------- -------------- --------------
Luika OP
---------------------------- ----------- ---------- -------------- --------------
Probable Reserve - - -- -
---------------------------- ----------- ---------- -------------- --------------
Ilunga OP
---------------------------- ----------- ---------- -------------- --------------
Probable Reserve 188 2.75 17 15
---------------------------- ----------- ---------- -------------- --------------
Black Tree Hill OP
---------------------------- ----------- ---------- -------------- --------------
Probable Reserve - - - -
---------------------------- ----------- ---------- -------------- --------------
Elizabeth Hill OP
---------------------------- ----------- ---------- -------------- --------------
Probable Reserve 734 1.34 32 29
---------------------------- ----------- ---------- -------------- --------------
Jamhuri OP
---------------------------- ----------- ---------- -------------- --------------
Probable Reserve 101 2.05 7 6
---------------------------- ----------- ---------- -------------- --------------
Shamba OP
---------------------------- ----------- ---------- -------------- --------------
Probable Reserve 232 2.17 16 15
---------------------------- ----------- ---------- -------------- --------------
Total Ore Reserve -
Open Pits 1,255 1.77 71 65
---------------------------- ----------- ---------- -------------- --------------
Exploration and Future Potential at New Luika
Total resources that remain outside the Plan amount to 9.5 Mt at 2.24 g/t for 683,000 oz (1.0 g/t cut-off for open pit; 3.0 g/t cut-off for underground). Of this total, around 3.5 Mt sits in the high grade deposits of Bauhinia Creek, Luika and Ilunga. Each of these is open at depth and only constrained by the need for further drilling. Work will continue to enhance our understanding of these deposits which have or will have the benefit of existing mine infrastructure.
Shanta has committed to a program of exploration focused on the optimisation and upgrade of known mineralised prospects within the NLGM mining licence, as well as exploration on tenements in the vicinity of NLGM currently held by the Company.
Drilling budgets have been approved for the balance 2017 with the intention to continue to add resources and update the Plan.
All satellite deposits within the license can benefit from additional drilling and provide the opportunity to upgrade the existing resources. Greater potential may remain to expand the resource base because all satellite deposits are open at depth, and in some cases along strike. This has been aptly illustrated with the development through 2016 of the Ilunga Prospect.
Beyond the resources within the NLGM mining license, exploration is also being undertaken in the Company's adjacent tenements which hold the potential for medium term resources as a feed to the NLGM processing plant. Nkuluwisi drilling was reported in March 2017 and on-going progress on this and other work will be reported in due course.
NLGM Deposits - Resources Outside Mine Design (1.0Au
g/t COG OP, 3.0 Au g/t COG UG)
Open Pit Deposit BC LK JH ILU SH EH LS BTN BTH Total
-------------
Ore Tonnes
(Indicated) 89,145 498,149 577,571 206,020 57,232 230,702 121,948 114,012 436,641 2,331,421
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Grade (Au
g/t) 3.86 2.81 1.74 2.70 1.37 1.61 3.60 1.78 1.64 2.19
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Contained
Ounces (oz) 11,077 45,060 32,228 17,910 2,518 11,918 14,118 6,525 23,068 164,421
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Ore Tonnes
(Inferred) 277,696 4,475 30,506 8,500 95,463 162,468 76,324 37,423 97,733 790,586
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Grade (Au
g/t) 1.87 3.10 1.44 1.33 1.59 1.42 3.08 1.40 1.60 1.79
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Contained
Ounces (oz) 16,699 447 1,410 364 4,883 7,407 7,567 1,684 5,015 45,475
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Total
Open Ore Tonnes
Pit (Ind+Inf) 366,841 502,624 608,077 214,520 152,695 393,170 198,272 151,435 534,374 3,122,007
------------- ------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Grade (Au
g/t) 2.36 2.82 1.72 2.65 1.51 1.53 3.40 1.69 1.63 2.09
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Contained
Ounces (oz) 27,775 45,506 33,638 18,273 7,401 19,325 21,685 8,209 28,083 209,897
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Underground Deposit BC LK JH ILU SH EH LS BTN BTH Total
Ore Tonnes
(Indicated) 343,791 690,546 32,985 259,707 538 345,747 126,769 1,800,083
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Grade (Au
g/t) 3.07 2.83 2.73 2.63 1.47 1.68 1.4021885 2.52
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Contained
Ounces (oz) 33,982 62,733 2,890 21,941 25 18,718 - - 5,715 146,005
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Ore Tonnes
(Inferred) 942,006 841,217 730,909 395,717 7,032 1,018,895 102,419 514,554 4,552,750
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Grade (Au
g/t) 3.484 1.863 1.625 4.072 1.594 1.377 3.199 1.517 2.23
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Contained
Ounces (oz) 105,522 50,386 38,180 51,802 360 45,115 10,533 - 25,104 327,003
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Total Ore Tonnes
Underground (Ind+Inf) 1,285,797 1,531,762 763,894 655,425 7,570 1,364,643 102,419 - 641,323 6,352,833
------------- ------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Grade (Au
g/t) 3.37 2.30 1.67 3.50 1.59 1.45 3.20 - 1.49 2.32
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Contained
Ounces (oz) 139,504 113,119 41,070 73,743 386 63,833 10,533 - 30,819 473,008
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Open Pit
+
Underground Deposit BC LK JH ILU SH EH LS BTN BTH Total
-------------
Ore Tonnes
(Indicated) 432,936 1,188,695 610,556 465,727 57,771 576,449 121,948 114,012 563,410 4,131,504
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Grade (Au
g/t) 3.24 2.82 1.79 2.66 1.37 1.65 3.60 1.78 1.59 2.34
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Contained
Ounces (oz) 45,059 107,793 35,118 39,851 2,544 30,636 14,118 6,525 28,783 310,427
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Ore Tonnes
(Inferred) 1,219,702 845,691 761,414 404,217 102,495 1,181,363 178,743 37,423 612,287 5,343,336
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Grade (Au
g/t) 3.12 1.87 1.62 4.01 1.59 1.38 3.15 1.40 1.53 2.17
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Contained
Ounces (oz) 122,220 50,832 39,590 52,166 5,244 52,522 18,100 1,684 30,119 372,478
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Total Ore Tonnes
OP+UG (Ind+Inf) 1,652,638 2,034,386 1,371,970 869,944 160,266 1,757,813 300,691 151,435 1,175,697 9,474,840
------------- ------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Grade (Au
g/t) 3.15 2.43 1.69 3.29 1.51 1.47 3.33 1.69 1.56 2.24
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Contained
Ounces (oz) 167,280 158,625 74,709 92,017 7,787 83,158 32,218 8,209 58,902 682,905
--------------------------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- -----------
Enquiries:
Shanta Gold Limited
+255 (0)22 2601
Toby Bradbury (CEO) 829
Eric Zurrin (CFO)
Nominated Adviser and Broker
Peel Hunt LLP
Matthew Armitt / Ross Allister
/ Chris Burrows +44 (0)20 7418 8900
Financial Public Relations
Tavistock
Jos Simson / Emily Fenton
/ Barney Hayward +44 (0)20 7920 3150
About Shanta Gold
Shanta Gold is an East Africa-focused gold producer, developer and explorer. It currently has defined ore resources on the New Luika and Singida projects in Tanzania and holds exploration licences over a number of additional properties in the country. Shanta's flagship New Luika Gold Mine commenced production in 2012 and produced 87,713 ounces in 2016. The Company is admitted to trading on London's AIM and has approximately 583 million shares in issue.
For further information please visit: www.shantagold.com.
Competent Person Statement
The technical information contained within this announcement pertaining to the underground reserves has been reviewed and approved by Mr. Keith Marshall BSc. C.Eng., a Member of the Institute of Materials, Minerals and Mining (MIMMM), a 'Recognized Professional Organization' (RPO) included in a list that is posted on the ASX website from time to time. Mr. Marshall is a consultant to Shanta and has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and for the purposes of the AIM Guidance Note on Mining and Oil & Gas Companies dated June 2009.
The Ore Reserve for Bauhinia Creek, Luika and Ilunga underground has been prepared in accordance with the JORC Code 2012. The Ore Reserve estimate is based on utilising underground mining methods of long-hole open-stoping, and cut-and-fill. A cut-off grade of 3.0 g/t Au is applied to long-hole open-stoping areas and a cut-off grade of 3.5 g/t Au is applied in cut-and-fill areas, at Ilunga a cut-off grade of 2.6g/t has been applied to the long hole stoping operation. Economic evaluations are at a gold price of US$1,200/ oz. Ore processing is through the existing NLGM processing plant at a gold recovery of 91%.
The Ore Reserve for Jamhuri, Ilunga, Shamba and Elizabeth Hill satellite open pits has been prepared in accordance with the JORC Code 2012. The as mined surfaces used for the calculation of remaining Ore Reserves for Ilunga and Jamhuri were dated end December, 2016.
The Ore Reserve estimate is based on utilising conventional open pit method. A cut-off grade of 0.7 g/t Au is applied to compute the economic reserves. Economic evaluations are at a gold price of US$1,200 /oz. Ore processing is through the existing New Luika processing plant at a gold recovery of 91%.
The JORC Code (2012) compliant study supporting the Open Pit Ore Reserve statement was completed by Philip van Vuuren (open pit), Shanta Gold's Consultant Mining Engineer. The JORC Code (2012) compliant December 2016 Mineral Resources estimate, summarised above, formed the basis of this Ore Reserve estimate. Open pit ore Reserves were estimated with Micromine 2014, utilising the Lerchs-Grossman optimization algorithm, using the current mining operation's cost structure and pit slopes defined in geotechnical reports by Middindi.
JORC Code Table 1. Section 4 Estimation and Reporting of Ore Reserves
Criteria JORC Code explanation Commentary
====================================== ====================================== ======================================
Mineral Resource estimate for Description of the Mineral Resource The mineral resource estimate for
conversion to Ore Reserves estimate used as a basis for the Bauhinia Creek and Luika was carried
conversion to an Ore out by D E Briggs,
Reserve. Member SAMREC and made available in
Clear statement as to whether the the form of a resource block model to
Mineral Resources are reported AMC in May 2015.
additional to, or inclusive AMC carried out a detailed review of
of, the Ore Reserves. the estimation of the Mineral
Resource. The Mineral Resource
is inclusive of the Ore Reserve. There
has been no change to Mineral Resource
Estimate for
Bauhinia Creek or Luika since this
analysis.
The mineral resource estimate Ilunga
was conducted by Sphynx Consulting.
====================================== ====================================== ======================================
Site visits Comment on any site visits undertaken Three visits to the site have been
by the Competent Person and the undertaken by the Competent Person
outcome of those visits. (CP), Keith Marshall
If no site visits have been undertaken in 2016 and 2017 with the focus on the
indicate why this is the case. underground. The CP is familiar with
the deposits to
be mined.
The CP for the open pits, Philip van
Vuuren, has been to the site many
times and is very familiar
with each of the open pit deposits and
local conditions.
====================================== ====================================== ======================================
Study status The type and level of study undertaken Detailed design work on the
to enable Mineral Resources to be underground mine has been carried out
converted to Ore internally and reviewed
Reserves. by the respective CP. The plans
The Code requires that a study to at established are considered to be
least Pre-Feasibility Study level has technically achievable and
been undertaken economically viable.
to convert Mineral Resources to Ore Detailed design work on the open pits
Reserves. Such studies will have been has been carried out internally and
carried out and reviewed by the
will have determined a mine plan that respective CP. The plans established
is technically achievable and are considered to be technically
economically viable, and achievable and economically
that material Modifying Factors have viable.
been considered.
====================================== ====================================== ======================================
Cut-off parameters The basis of the cut-off grade(s) or The cut-off grade was estimated at 3.0
quality parameters applied. g/t for long-hole stoping and at 3.5
g/t for cut-and-fill
mining and development, and 2.6g/t au
at the Ilunga underground mine The
cut-off grade estimate
was based on processing and general
and administration costs provided by
SMCL and a gold price
of $1,200 /oz.
====================================== ====================================== ======================================
Mining factors or assumptions The method and assumptions used as The selection of mining method was
reported in the Pre-Feasibility or initially based on the orebody
Feasibility Study to geometry and expected ground
convert the Mineral Resource to an Ore conditions. The selection of mining
Reserve (i.e. either by application of method was done in consultation with
appropriate SMCL who preferred
factors by optimisation or by a single mining method to be applied
preliminary or detailed design). to each orebody. Overhand cut-and-fill
The choice, nature and appropriateness mining method
of the selected mining method(s) and was selected for Luika and long-hole
other mining parameters open-stoping mining method was
including associated design issues selected for Bauhinia
such as pre-strip, access, etc. Creek.
The assumptions made regarding Geotechnical recommendations on
geotechnical parameters (e.g. pit appropriate stope sizes and ground
slopes, stope sizes, etc.), support were provided to
grade control and pre-production SMCL by Middindi Consulting (Pty) Ltd.
drilling. Long-hole open-stopes were limited to
The major assumptions made and Mineral 20 m along strike
Resource model used for pit and stope and two 15 m sub levels high.
optimisation Dilution was incorporated into the ore
(if appropriate). reserve by applying a waste skin to
The mining dilution factors used. the conceptual
The mining recovery factors used. mining shapes. A skin of 0.3 m was
Any minimum mining widths used. used to cut-and-fill, and long-hole
The manner in which Inferred Mineral open-stope footwalls.
Resources are utilised in mining A skin of 0.8 m was used for long-hole
studies and the sensitivity open-stope hangingwall.
of the outcome to their inclusion. A mining recovery factor of 0.95 was
The infrastructure requirements of the applied to both cut-and-fill and
selected mining methods. long-hole open-stope
production, with the exception of the
final retreat under cut-and-fill sill
pillars where
a mining recovery factor of 0.80 was
applied. Minimum mining widths of 6 m
for cut-and-fill
and 3 m for long-hole open-stopes were
used. A minimum pillar dimension
between parallel stopes
of 4 m for cut-and-fill and 7.5 m for
long-hole open-stopes was also applied
====================================== ====================================== ======================================
Metallurgical factors or assumptions The metallurgical process proposed and The metallurgical treatment of the ore
the appropriateness of that process to is through the existing New Luika
the style of processing facility.
mineralisation. This plant is a conventional milling
Whether the metallurgical process is and cyanidation leaching facility. The
well-tested technology or novel in plant currently
nature. treats similar mineralization
The nature, amount and recovered by open-pit mining on up dip
representativeness of metallurgical extensions of the Bauhinia
test work undertaken, the nature Creek and Luika deposits.
of the metallurgical domaining applied Processing costs and processing
and the corresponding metallurgical recoveries were provided by SMCL and
recovery factors are based on performance
applied. of the existing processing facility.
Any assumptions or allowances made for The mineralization includes silver and
deleterious elements. this is recovered by the processing
The existence of any bulk sample or facility. The Mineral
pilot scale test work and the degree Resource does not estimate silver and
to which such samples it is not included in the economic
are considered representative of the analysis. The contribution
orebody as a whole. of silver is estimated at 2.5% of the
For minerals that are defined by a total metal value.
specification, has the ore reserve There is no metallurgical study
estimation been based specific to the underground project.
on the appropriate mineralogy to meet The assumption is the
the specifications? metallurgical characteristics of the
mineralization are the same as the ore
currently being
treated.
====================================== ====================================== ======================================
Environmental The status of studies of potential No specific work in relation to
environmental impacts of the mining environmental considerations was
and processing operation. carried out for this Ore
Details of waste rock characterisation Reserve. The underground project is
and the consideration of potential part of an existing mine-site and
sites, status of located beneath currently
design options considered and, where operating open-pit mines. The
applicable, the status of approvals environmental consideration in
for process residue relation to the underground mine
storage and waste dumps should be will be relatively small and
reported. incremental to the existing site
considerations.
====================================== ====================================== ======================================
Infrastructure The existence of appropriate Infrastructure sufficient for the
infrastructure: availability of land currently operating mine exists.
for plant development, power,
water, transportation (particularly
for bulk commodities), labour,
accommodation; or the ease
with which the infrastructure can be
provided, or accessed.
====================================== ====================================== ======================================
Costs The derivation of, or assumptions Capital and operating costs for the
made, regarding projected capital project have been estimated in a
costs in the study. detailed cost model compiling
The methodology used to estimate estimates of equipment operating time,
operating costs. labour requirement, and major
Allowances made for the content of consumables derived from
deleterious elements. the mining schedule, and equipment
The source of exchange rates used in specifications and recommendations
the study. from specialist consultants.
Derivation of transportation charges. Factors based on experience from
The basis for forecasting or source of similar operations were applied for
treatment and refining charges, the estimation of maintenance
penalties for failure costs, equipment availability, and
to meet specification, etc. utilization.
The allowances made for royalties Capital costs were compiled from
payable, both Government and private. quantities derived from design and
project-specific quotations
from equipment supplier.
All government defined royalties and
costs are covered in the cost model.
====================================== ====================================== ======================================
The derivation of, or assumptions A metal price of $1,200 /oz was
Revenue factors made regarding revenue factors assumed at the commencement of the
including head grade, metal project in consultation
or commodity price(s) exchange rates, with SMCL. This value was selected as
transportation and treatment charges, an approximate price following an
penalties, net examination of the
smelter returns, etc. previous five years gold price.
The derivation of assumptions made of A selling cost of $60 /oz was
metal or commodity price(s), for the deducted from the metal price to
principal metals, cover transport refining costs
minerals and co-products. and royalties.
No value was assigned to silver as
silver is not estimated in the
Resource. The contribution
of silver is approximately 2.5% of
the revenue in the current operation.
====================================== ====================================== ======================================
Market assessment The demand, supply and stock situation Gold is sold on an open traded market.
for the particular commodity, No market assessment specific to gold
consumption trends and or this project
factors likely to affect supply and is considered necessary.
demand into the future. SMCL is required by borrowing
A customer and competitor analysis facilities to hedge 30% of gold
along with the identification of production to protect cash flows.
likely market windows The balance of gold production and all
for the product. silver production is sold at spot
Price and volume forecasts and the prices.
basis for these forecasts.
For industrial minerals the customer
specification, testing and acceptance
requirements prior
to a supply contract.
====================================== ====================================== ======================================
Economic The inputs to the economic analysis to A discount rate of 10% has been used
produce the net present value (NPV) in in economic evaluation.
the study, the Sensitivities were carried out on gold
source and confidence of these price, mined grade, operating cost,
economic inputs including estimated and capital cost.
inflation, discount rate, The underground project remains
etc. economic at the expected range of
NPV ranges and sensitivity to operating and capital costs,
variations in the significant and mined grade. The project is
assumptions and inputs. sensitive to a lower gold price, and
becomes uneconomic at
gold price less than approximately
$800 /oz
====================================== ====================================== ======================================
Social The status of agreements with key No specific work in relation to social
stakeholders and matters leading to considerations was carried out for
social licence to operate. this Ore Reserve.
The project is part of an existing
operation, and the existing agreements
and situation will
apply.
====================================== ====================================== ======================================
Other To the extent relevant, the impact of The mine underground project is
the following on the project and/or on located beneath open-pits in a region
the estimation where relatively high
and classification of the Ore and intense rainfall events can occur.
Reserves: This risk is controlled by surface
Any identified material naturally water management,
occurring risks. and the design and operation of the
The status of material legal underground mine. This risk is not
agreements and marketing arrangements. considered to affect
The status of governmental agreements the Ore Reserve.
and approvals critical to the SMCL exclusively own the mining leases
viability of the project, ML 408/2010, ML519/2014, and
such as mineral tenement status, and ML518/2014, which contain
government and statutory approvals. the underground Ore Reserves and
There must be reasonable associated site facilities. All
grounds to expect that all necessary government approvals are
Government approvals will be received in place and expected to be
within the timeframes maintained.
anticipated in the Pre-Feasibility or
Feasibility study. Highlight and
discuss the materiality
of any unresolved matter that is
dependent on a third party on which
extraction of the reserve
is contingent.
====================================== ====================================== ======================================
Classification The basis for the classification of The total Ore Reserve is classified as
the Ore Reserves into varying Probable Reserve as it is based only
confidence categories. on Indicated Resource.
Whether the result appropriately The Mineral Resource does not contain
reflects the Competent Person's view Measured Resources. The classification
of the deposit. and Ore Reserve
The proportion of Probable Ore reflects the Competent Person's view
Reserves that have been derived from of the deposit.
Measured Mineral Resources
(if any).
====================================== ====================================== ======================================
Audits or reviews The results of any audits or reviews The work supporting Ore Reserve was
of Ore Reserve estimates. undertaken by a number of senior
engineers and principal
engineers within SMCL. The work was
subject to internal Peer Review
processes and review by
the respective Competent Persons.
====================================== ====================================== ======================================
Discussion of relative accuracy/ Where appropriate a statement of the The Ore Reserve is estimated using a
confidence relative accuracy and confidence level gold price of $1,200 /oz and a cut-off
in the Ore Reserve grade above breakeven
estimate using an approach or grade. The reserve is supported by
procedure deemed appropriate by the appropriate design, scheduling, and
Competent Person. For example, costing work reported
the application of statistical or in a mine plan. Increases in operating
geostatistical procedures to quantify costs or a reduction in the gold price
the relative accuracy will reduce
of the reserve within stated the Ore Reserve.
confidence limits, or, if such an No statistical procedures have been
approach is not deemed appropriate, carried out to quantify the accuracy
a qualitative discussion of the of the Ore Reserve.
factors which could affect the The estimate is based on mine design
relative accuracy and confidence work on the resource model. The
of the estimate. resource however, is
The statement should specify whether likely to be highly variable at the
it relates to global or local local mining scale and this will
estimates, and, if local, result in significant
state the relevant tonnages, which changes in Ore Reserve on the scale of
should be relevant to technical and individual excavations. Modifying
economic evaluation. factors such as dilution
Documentation should include and mining recovery, estimates of
assumptions made and the procedures drilling quantities, estimates of
used. cemented rockfill have
Accuracy and confidence discussions been applied globally. Significant
should extend to specific discussions variations are expected on the scale
of any applied Modifying of the individual
Factors that may have a material mining excavation. These estimates
impact on Ore Reserve viability, or should be reviewed prior to mining and
for which there are remaining also following production
areas of uncertainty at the current experience.
study stage. Material variability in the Ore
It is recognised that this may not be Reserve is expected to be due to:
possible or appropriate in all Variability in the resource in both
circumstances. These location and grade on the local scale.
statements of relative accuracy and The capability of the mining operation
confidence of the estimate should be to identify, delineate and mine the
compared with production ore without significant
data, where available. additional dilution or ore loss.
Changes in the key input parameters,
specifically gold price, and operating
cost.
====================================== ====================================== ======================================
Glossary of Terms
g/t Grams per metric tonne. The unit of measurement
of metal content or grade, equivalent to
parts per million.
------------- -----------------------------------------------------
Indicated An 'Indicated Mineral Resource' is that
Mineral part of a Mineral Resource for which quantity,
Resource grade (or quality), densities, shape and
physical characteristics are estimated
with sufficient confidence to allow the
application of Modifying Factors in sufficient
detail to support mine planning and evaluation
of the economic viability of the deposit.
Geological evidence is derived from adequately
detailed and reliable exploration, sampling
and testing gathered through appropriate
techniques from locations such as outcrops,
trenches, pits, workings and drill holes,
and is sufficient to assume geological
and grade (or quality) continuity between
points of observation where data and samples
are gathered.
An Indicated Mineral Resource has a lower
level of confidence than that applying
to a Measured Mineral Resource and may
only be converted to a Probable Ore Reserve.
------------- -----------------------------------------------------
Inferred An 'Inferred Mineral Resource' is that
Mineral part of a Mineral Resource for which quantity
Resource and grade (or quality) are estimated on
the basis of limited geological evidence
and sampling. Geological evidence is sufficient
to imply but not verify geological and
grade (or quality) continuity. It is based
on exploration, sampling and testing information
gathered through appropriate techniques
from locations such as outcrops, trenches,
pits, workings and drill holes. An Inferred
Mineral Resource has a lower level of confidence
than that applying to an Indicated Mineral
Resource and must not be converted to an
Ore Reserve. It is reasonably expected
that the majority of Inferred Mineral Resources
could be upgraded to Indicated Mineral
Resources with continued exploration.
------------- -----------------------------------------------------
In-Situ In its natural position or place.
------------- -----------------------------------------------------
JORC The Australasian Code for Reporting of
Code Exploration Results, Mineral Resources
and Ore Reserves (the 'JORC Code' or 'the
Code') sets out minimum standards, recommendations
and guidelines for Public Reporting in
Australasia of Exploration Results, Mineral
Resources and Ore Reserves. The Joint Ore
Reserves Committee ('JORC') was established
in 1971 and published several reports containing
recommendations on the classification and
Public Reporting of Ore Reserves prior
to the release of the first edition of
the JORC Code in 1989.
Revised and updated editions of the Code
were issued in 1992, 1996, 1999, and 2004.
The 2012 edition supersedes all previous
editions.
------------- -----------------------------------------------------
Koz One thousand Troy ounces. All references
to ounces are Troy ounces with the conversion
factor being 31.1034768 metric grams per
Troy ounce
------------- -----------------------------------------------------
Mineral A 'Mineral Resource' is a concentration
Resource or occurrence of solid material of economic
interest in or on the Earth's crust in
such form, grade (or quality), and quantity
that there are reasonable prospects for
eventual economic extraction. The location,
quantity, grade (or quality), continuity
and other geological characteristics of
a Mineral Resource are known, estimated
or interpreted from specific geological
evidence and knowledge, including sampling.
Mineral Resources are sub-divided, in order
of increasing geological confidence, into
Inferred, Indicated and Measured categories.
------------- -----------------------------------------------------
Mt One million metric tonnes
------------- -----------------------------------------------------
Ore Reserve An 'Ore Reserve' is the economically mineable
part of a Measured and/or Indicated Mineral
Resource. It includes diluting materials
and allowances for losses, which may occur
when the material is mined or extracted
and is defined by studies at Pre-Feasibility
or Feasibility level as appropriate that
include application of Modifying Factors.
Such studies demonstrate that, at the time
of reporting, extraction could reasonably
be justified.
------------- -----------------------------------------------------
Probable A 'Probable Ore Reserve' is the economically
Ore Reserve mineable part of an Indicated, and in some
circumstances, a Measured Mineral Resource.
The confidence in the Modifying Factors
applying to a Probable Ore Reserve is lower
than that applying to a Proved Ore Reserve.
------------- -----------------------------------------------------
Recoverable That portion of the metal contained within
Ounces the ore that can be recovered through metallurgical
processing
------------- -----------------------------------------------------
ROM Mined ore that can be processed by the
recovery plant
------------- -----------------------------------------------------
Strike The longest horizontal dimension of an
length ore body or zone of mineralisation.
------------- -----------------------------------------------------
Tailings The material that remains after all economically
and technically recoverable precious metals
have been removed from the ore during processing
------------- -----------------------------------------------------
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
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