Shanta Gold (AIM: SHG), the East Africa-focused gold producer, announces its unaudited results for the six months ended 30 June 2020 (“H1” or the “Period”).
H1 2020 HIGHLIGHTS
Financial
· Revenue of US$73.0 million (“m”) (H1 2019: US$53.6 m);
· All In Sustaining Costs (“AISC”) of US$817 /oz1 (H1 2019: US$730 /oz), on track to meet annual guidance of US$830-880 /oz;
· Adjusted EBITDA2 of US$34.4 m (H1 2019: US$22.6 m);
· Profit before taxation of US$15.3 m (H1 2019: loss before taxation of US$4.1 m);
· Operating cash flow before movement in working capital of US$29.5 m (H1 2019: US$23.0 m);
· Net cash3 of US$2.1 m (FY 2019: net debt of US$14.3 m);
· Gross debt of US$13.4 m (FY 2019: US$22.0 m);
· US$40 m Investec Senior Secured loan facilities fully repaid;
· Cash, and available liquidity4 of US$21.6 m (FY 2019: US$13.7 m);
· Forward sale commitments of 27,000 oz (FY 2019: 40,000 oz) reduced post period to 18,588 oz (FY 2019: 40,000 oz);
· VAT receivable due to the Company of US$23.2 m (FY 2019: US$21.8 m); and,
· Capital expenditure of US$7.4 m (H1 2019: US$8.0 m, net of pre-production revenue).
Operational
· Gold production of 42,383 oz (H1 2019: 42,230 oz);
· Annual production guidance of 80,000 – 85,000 oz reiterated for 2020;
· No lost time injuries (“LTI’s”) during the Period, with no LTI’s since Q4 2017; and,
· Precautionary measures in place to reduce the risks posed by COVID-19; operational productivity remains unaffected.
Singida
· JORC 2012 compliant gold reserve announced totalling 243 koz at 3.0 g/t;
· Updated JORC compliant Mineral Resource Estimate (“MRE”) announced totalling 11.8 Mt at 2.38 g/t for 904 koz contained gold; and,
· Financing discussions for Singida’s development are advanced and an announcement is expected during Q3.
Acquisition of the West Kenya Project
· Definitive agreement entered into to acquire the West Kenya Project from Barrick Gold Corporation (“Barrick”); includes a NI-43101 compliant Inferred Mineral Resource Estimate of 1,182,000 oz grading 12.6 g/t from surface;
· Fully financed purchase price totalling US$7 m cash, US$7.5 m shares in the Company issued to Barrick, and a 2% Net Smelter Royalty (“NSR”) on future gold production; and,
· Scoping Study expected to be released following acquisition completion.
Development and Exploration
· Underground exploration drilling to replace depleted ounces ongoing at Bauhinia Creek (“BC”) and Ilunga; drilling on the BC Deep West and Ilunga targets have generated encouraging results; and,
· Surface exploration drilling has commenced to test the continuity of mineralization at depth at the Luika deposit, targeting conversion of Inferred resources.
Post Period
· Completion of the acquisition of the West Kenya Project was announced on 19 August 2020 following satisfaction of all of the closing conditions for the transaction.
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. Net cash includes liquidity available from 1,425 oz in transit to the refinery at 30 June 2020 (FY 2019: 2,841 oz).
Note: 4. Available liquidity has been derived as unrestricted cash, 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:
“Entering a net cash position in H1 was a major achievement for Shanta and followed sustained deleveraging over a number of years. New Luika Gold Mine remains on track to deliver production and costs within annual guidance and this has been achieved with a continued exceptional safety record.”
“With the stronger gold price environment, the Company remains focussed on value-driven opportunities alongside maintaining sustainable and cost-efficient operations at New Luika Gold Mine. With the acquisition of the West Kenya Project now complete Shanta has diversified its East-African portfolio with a highly complementary asset that significantly bolsters the Company’s growth pipeline.”
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