Shanta Gold (AIM: SHG), the East Africa-focused gold producer, developer and explorer, announces its unaudited results for the six months ended 30 June 2019 (the “Period”).
HIGHLIGHTS
Financial
· H1 2019 revenue of US$53.6 m (H1 2018: US$49.3 m);
· H1 2019 Cash Costs of US$530 /oz (H1 2018: US$549 /oz) and All In Sustaining Costs (“AISC”) of US$730 /oz (H1 2018: US$757 /oz), below annual guidance of US$740-780 /oz1;
· Cash flow from operating activities before movement in working capital US$23.0 m up 5% from US$22.0 m in H1 2018;
· H1 2019 adjusted EBITDA2 of US$22.6 m (H1 2018: US$22.7 m);
· Gross debt reduced to US$30.1 m (FY 2018: US$40.5 m), following US$8.8 m of principal repayments on borrowings and a US$4.9 m partial buyback of Convertible Loan Notes during the Period;
· Net debt, excluding bullion available for sale, of US$26.9 m (FY 2018: US$31.5 m);
· VAT receivable due to the Company of $25.3 m;
· Cash, and available liquidity3 of US$9.3 m; and,
· Capital expenditure of US$8.0 m (net of US$2.9 m Ilunga pre-production revenue) (H1 2018: US$7.8 m).
Operational
· H1 2019 gold production of 42,230 oz up 11% from 38,207 oz in H1 2018;
· New all-time quarterly record set for tonnes milled during the Period;
· Annual production guidance of 80,000 – 84,000 oz reiterated for 2019; and,
· No lost time injuries (“LTI’s”) during the Period, with no LTI’s since Q4 2017.
Development and Exploration
· Underground exploration drilling among the best historic intersected grades and widths at New Luika Gold Mine; and,
· Ongoing exploration drilling expected to result in replacement of 2019 reserve depletion at US$2 /oz exploration cost.
Singida
· Singida Resources Plc (“Singida”) to proceed with a targeted US$20 million (“m”) minimum equity offering via an Initial Public Offering (“IPO”) on the Dar es Salaam Stock Exchange (“DSE”);
· An IPO prospectus has been submitted to the Tanzanian Capital Markets and Securities Authority (“CMSA”) and the DSE;
· Shanta Gold will retain at least 51 per cent ownership of Singida and will operate the Project; and,
· IPO proceeds would finance the upfront capital to bring the Project into production and provide additional funds for exploration.
Post Period
· Ilunga Underground Mine has achieved commercial production ahead of time and under budget;
· Capital investment at Ilunga prior to commercial production of US$7.9 m (US$5.0 m after netting off pre-production revenue);
· Next phase of underground drilling targeting resource conversion at Ilunga is expected to take place in H1 2020; and,
· Singida has entered into a non-binding term sheet with a privately-held, East African, multi-national conglomerate, for an unsecured, non-recourse loan facility of US$10 m at the asset-level.
Note: 1. Development costs at the BC, Luika and Ilunga underground operations are not included in AISC.
Note: 2. EBITDA is earnings before interest, tax, depreciation and amortisation which has been derived as operating profit exclusive of pre-production revenue, 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: 3. Available liquidity has been derived as restricted cash plus the sale value of bullion available for sale at the end of the Period (net of royalties and expected selling costs).
Eric Zurrin, Chief Executive Officer, commented:
“In H1 2019 we have continued to see steady operational performance at the New Luika Gold Mine and remain on track to deliver both full-year production and costs within guidance. This has been achieved with an exceptional safety record which by the end of H1 2019 had reached 2.9 million man-hours without an LTI.”
“Singida continues to progress towards the planned IPO and we look forward to offering Tanzanians a rare investment opportunity within their own mining sector as we build Shanta’s second mine in Tanzania.”
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