Shanta Gold Share Discussion Threads

[risa5] 20/7/2020 09:06

Its for reference and potential new investors.

[amazoner] 20/7/2020 09:04

you woke up late risa5 :) we've already read the update 2 hours ago

[risa5] 20/7/2020 09:01

amazoner. Are you joking ?

[amazoner] 20/7/2020 09:00

risa5
20 Jul '20 - 08:53 - 34759 of 34760 (Filtered)

[amazoner] 20/7/2020 08:59

risa5
20 Jul '20 - 08:53 - 34759 of 34759 (Filtered)

[risa5] 20/7/2020 08:53

Q2 2020 PRODUCTION & OPERATIONAL UPDATE

Shanta Gold (AIM: SHG), the East Africa-focused gold producer, announces its production and operational results for the quarter ended 30 June 2020 (the "Quarter", "Q2" or the "Period") for its New Luika Gold Mine ("NLGM" or "New Luika"), in South Western Tanzania.

Q2 Highlights

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Quarterly gold production of 22,216 ounces ("oz") (Q1: 20,167 oz);

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Adjusted EBITDA1 of US$19.4 million ("m") (Q1: US$15.0 m) based on an average realised gold price of US$1,663 /oz;

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Free cash flow ("FCF")2 of US$15.5 m (Q1: US$3.9 m);

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Record quarterly deleveraging of US$17.2 m, taking Shanta into net cash for the first time in its producing history;

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Net cash3 of US$2.1 m (Q1: net debt of US$15.1 m);

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Cash, and available liquidity4 of US$21.6 m (Q1: US$15.7 m);

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Gross debt down 34% to US$13.4 m (Q1: US$20.4 m);

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US$40 million Investec Senior Secured loan facilities fully repaid;

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Forward sale commitments of 27,000 oz (Q1: 31,265 oz) reduced post period to 23,048 oz, a 42% reduction from the end of 2019; on track to be unhedged by end of 2020;

●

All In Sustaining Costs ("AISC")5 of US$771 /oz (Q1: US$883 /oz);

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Cash Operating Costs of US$512 /oz (Q1: US$630 /oz);

●

Acquisition of the West Kenya Project on track for closure in Q3; major completion conditions now satisfied;



●

JORC 2012 compliant gold reserve of 243 koz announced at Singida grading 3.0 g/t, with potential for reserve expansion, including at depth;



●

Zero Lost Time Injuries ("LTI's"), with no LTI's since Q4 2017; and,

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Precautionary measures remain in place to reduce the risks posed by COVID-19; operational productivity remains unaffected.



Operational Summary

●

176,415 tonnes ("t") milled (Q1: 174,069 t); processing plant continues to perform above nameplate capacity;

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Average head grade of 4.4 g/t for the quarter (Q1: 4.0 g/t);

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Average recoveries of 89.7% (Q1: 89.1%);

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State ("TANESCO") grid contributed 14% of NLGM's power requirements, expected to increase to 25% within 12 months; and,



●

Run of Mine ("ROM") stockpile of 97,986 t of ore grading 1.46 g/t (Q1: 123,500 t grading 1.45 g/t).




Financial Summary

●

Net cash of US$2.1 m (Q1: net debt of US$15.1 m), excluding US$3.6 m of doré in the gold room at the end of the Period;

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Unrestricted cash balance of US$12.9 m (Q1: US$5.3 m);

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Liquidity available for draw down from Exim working capital facility of US$2.5 m (Q1: US$2.5 m);

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AISC5 of US$771 /oz (Q1: US$833 /oz);

●

VAT receivable increased to US$23.2 m (Q1: US$22.9 m) following US$1.0 m offset against corporation taxes falling due (Q1: US$0.9 m); and,



●

Remaining VAT receivable is subject to verification audit by the Tanzanian Revenue Authority ("TRA") before being available for further offsets.



Singida

●

JORC 2012 compliant gold reserve announced totalling 243 koz at 3.0 g/t;

●

Over 90% of contained gold within the reserve is between 0-120 metres from surface, highlighting the potential for reserve expansion at depth;



●

Updated JORC compliant Mineral Resource Estimate ("MRE") announced totalling 11.8 Mt at 2.38 g/t for 904 koz contained gold, using a cut-off grade of 1.0 g/t;



●

MRE has been independently estimated and verified by a third-party Competent Person; and,



●

Financing discussions for its development are advanced and an announcement is expected during Q3.



West Kenya Project

●

Major completion conditions now satisfied, including approval from the Competition Authority of Kenya; transaction anticipated to close in Q3; and,



●

Scoping Study expected to be released following acquisition completion.


Exploration

●

Underground exploration drilling to replace depleted ounces is ongoing at Bauhinia Creek ("BC") and Ilunga;



●

Recent underground drilling on the BC Deep West and Ilunga targets have generated encouraging results;



●

Surface exploration drilling has commenced to test the continuity of mineralization at depth at the Luika deposit, targeting conversion of Inferred resources; and,



●

Results of the latest drilling campaigns will be announced once completed.



Corporate Social Responsibility ("CSR")

●

Shanta has helped to install infrastructure for a new District Coronavirus Patient Treatment Centre in Songwe;



●

Shanta has distributed over 2,000 "learn to read" English books to local schools;



●

Taps have been installed in nearby Patamela to improve water availability for the entire village;



●

Over 4,800 acres cultivated in latest sesame harvest under Shanta's farming initiative, with 1,418 participating farmers expected to earn in the region of US$1.0 m; and,



●

250 modern beehives donated by Shanta being used in local villages by newly-trained beekeepers.



2020 Guidance

●

Annual guidance of 80,000 - 85,000 oz at AISC5 of US$830 - 880 /oz reiterated for 2020.




Note: 1. EBITDA is earnings before interest, tax, depreciation and amortisation which has been derived as operating profit exclusive of depreciation/depletion of tangible assets and amortisation of intangible assets. Adjusted EBITDA has been derived as EBITDA before non-cash loss on unsettled forward contracts.



Note: 2. FCF has been derived as EBITDA adjusted for working capital movements, capital expenditure, corporate income tax payments and other non-cash items.



Note: 3. Net cash includes liquidity available from 1,425 oz in transit to the refinery at 30 June 2020.



Note: 4. Available liquidity has been derived as unrestricted cash, restricted cash and the sale value of doré available for sale at the end of the Period (net of royalties and expected selling costs).



Note: 5. Development costs at the BC, Luika and Ilunga underground operations are not included in AISC.



Eric Zurrin, Chief Executive Officer, commented:

"Shanta enters a new chapter with a net cash position, completing a period of enormous deleveraging. Annualised Q2 EBITDA at spot gold is just under $100m per annum from the New Luika mine with margins expanded from lower costs and a rising gold price. Future production at Singida is expected to significantly increase the company's cashflow.

Shanta expects to shortly conclude the acquisition of Barrick's Kenya assets whereupon Shanta will own three projects with 3 million oz of high quality gold resources. Shanta's near-term focus is on replacing reserves at New Luika, financing and commencing Singida's construction, and expanding the resource base at the West Kenya Project. We remain committed to rigorous capital allocation, growth of underlying shareholder value and to managing a sustainable and responsible mining company."

[imnotspartacus] 20/7/2020 08:52

Next resistance 25p...

[hazl] 20/7/2020 08:48

What a good day goodgrief!


Here, PRE SNG!

[goodgrief] 20/7/2020 08:41

Finally in profit... yeah!!

[qs99] 20/7/2020 08:38

Last post then I need to get on with the day job!

AV selling price at $1,663 allows further material delivery of chunky EBITDA numbers in Q3 IMO.....could allow gross debt of c.$13.4m to be reduced even further.

AISC reduction is material IMO

Newsflow of Kenya, Singida in Q3 allows plenty of room for positive updates in the next 8 weeks to further bolster the share price ......

negatives are the hedge if they do go for a reduction entirely in 2020, VAT audit if Tanz govt want to play silly ACACIA type games and reduce the recovery......

DYOR and good days all

[redhill] 20/7/2020 08:38

QS99

I was thinking that myself but maybe as they have rolled it over previously then possibly they can't.

I would also like them to refinance the debentures of $10 million due next year as the interest rate is very high.

[qs99] 20/7/2020 08:32

If hey are continuing to slowly reduce hedge, why can't they continue to roll it Redhill rather than try and offload it all in next qs?

[32campomar] 20/7/2020 08:31

What a great long term investment. New mine in Kenya, rising gold price, clearly well run & clearly undervalued.

[338] 20/7/2020 08:31

Redhill,
Investors should not focus on hedging clearance in the next 2 quarters... but put more focus on Singida financing and Kenya development

[redhill] 20/7/2020 08:30

The 15.92p trades showing up as sells are actually buys. Market Maker games !

[338] 20/7/2020 08:27

I won't be too worried if PoG get corrected to $1650 before breaking all time high or $2000+... Temporary price dip won't affect the company cash position... but more opportunity to reduce hedging... Hopefully Eric can make a swift move

[redhill] 20/7/2020 08:23

Not being negative but just be aware that more than half their production in the next 2 quarters will be used to clear their hedge.

However off set that against greatly reduced debt repayment.

[338] 20/7/2020 08:22

The most positive update is about NET CASH for the first time in history... Big institutions will start watching the share price...

[lenzcrafter] 20/7/2020 08:21

Wow. That's a nice Monday morning surprise. Long May it continue.

[amazoner] 20/7/2020 08:18

my 25p target is too low. the realised average selling gold price keep rising despite clearing out the hedging

[qs99] 20/7/2020 08:14

think the VAT could be perversely +ve no? Govt are sending in to review and confirm. Worst case they say zero, no difference to what market is expecting, if they confirm anything above that, could leave room for re-payment, or worst case offset vs CT in future? DYOR etc....

$100m EBITDA figure is a really interesting one to put out....yes they still have hedge, but with increased mining, the 20k+ left will become irrelevant v. soon. Add in new drilling, and a much wider reserve base, and IMO the rating on this share will change.....

it then could have firepower to take on other projects in the next 3 years or so....

perhaps 338's forecasts of £1.50 aren't that bonkers haha...>! DYOR and roll on 20p in the meantime

[338] 20/7/2020 08:14

We need more sellers to get new shareholders 😁

[338] 20/7/2020 08:13

Because at 4x $100m EBITDA... Market cap of £312m is fair... That's almost 40p per share... 👍🚀🚀🚀

[redhill] 20/7/2020 08:08

Can't seem to get an auto quote to buy even on a very small amount.

[338] 20/7/2020 08:08

I think a gradual hedge reduction is better than rushing it... So the company can fund Singida and Kenya development quicker 👍