TIDMSHG
RNS Number : 3125A
Shanta Gold Limited
28 March 2012
29 March 2012
Shanta Gold Limited
("Shanta Gold" or the "Company")
New Luika Gold Mine Progress Update
The Directors of Shanta Gold Limited (AIM: SHG) are pleased to
provide a progress update on the New Luika Gold Mine following an
analyst site visit.
Highlights:
-- Stockpiled ore estimated to contain over 13,000 ounces of
gold available for processing since commencement of ore mining in
November 2011
-- Plant construction well advanced with hot commissioning
expected by the end of Q2
-- First gold production expected mid-Q3 and first cash receipts
expected by the end of Q3
-- Updated resource statement expected during Q2 to drive
potential increase in plant capacity and production profile.
Walton Imrie, Executive Chairman, said:
"Shanta Gold is at a transformational stage in the history of
the Company and is fast approaching first production from the New
Luika Gold Mine which is now expected by mid-Q3. Almost all key
infrastructure is now on site and construction of the plant is well
advanced. Our desire to reinforce security measures with the
addition of a high security gold room has added approximately one
month to the construction timetable, which we believe is in the
Company and shareholders' interests. The extended timetable has
increased working capital requirements; however, we have a number
of options in place as demonstrated by our ability to source
low-cost debt capital and the enlarged and untapped equity
distribution facility announced in January of this year."
Gareth Taylor, Chief Executive Officer, said:
"Shanta Gold has been very active on the ground at the New Luika
Gold Mine. We commenced ore mining in November 2011 and now have
approximately 100,000 tonnes of high-grade ore, estimated to
contain over 13,000 ounces of gold, readily available to feed the
plant immediately upon commissioning, thereby maximising the
project's returns. There are over 500 people currently employed at
New Luika of which 200 people are based in camp and I am proud to
report that the project has achieved over 1 million injury-free man
hours to date. The updated New Luika resource statement expected
during Q2 will allow Shanta Gold to explore the possibility of
increasing the plant capacity and increase near-term production,
which the directors believe should further improve the project's
economics."
Mining Update
The New Luika Gold Mine ("New Luika") based in the Lupa
goldfields in southwest Tanzania will be Shanta Gold's first
producing mine. The Bauhinia Creek and Luika open pits will
together feed a centralised 50 tonne per hour ("tph") processing
plant. Pre-stripping at the open pits commenced in April 2011 and
first ore production commenced in November 2011. Both pits have
high-grade gold-bearing gravels at surface, which have been
stockpiled along with initial primary ore from Bauhinia Creek.
Excluding approximately 11,000 tonnes ("Kt") of stockpiled Bauhinia
Creek gravels which are awaiting test results, the Company has
stockpiled over 41 Kt of ore plus 48 Kt of unscreened gravels, in
total 89 Kt with an average grade of 4.6 g/t estimated to contain
over 13,000 ounces of gold. A further 30 Kt of primary ore with an
average grade of 4.8 g/t estimated to contain approximately 4,500
ounces of gold are exposed and available to mine at Bauhinia
Creek.
The Company is actively mining and drilling the Bauhinia Creek
pit using an external contractor's fleet that includes ten 40-tonne
dump trucks, six excavators, five dozers, and three blasthole rigs,
amongst other equipment. The current Bauhinia Creek mine plan
envisages a 120 m deep open pit operation. Based on the encouraging
exploration results announced in January 2012, the Company has
considered an enlarged conceptual Bauhinia Creek pit to a depth of
200 m. Bauhinia Creek has so far been mined to a depth of 25 m at
its lowest point with over 1 million m(3) of ore and waste mined by
the Company.
Construction of the tailings dam has been completed with initial
capacity for almost the first three years of production.
The Company's decision to begin mining prior to completion of
the plant was driven by a desire to increase the project's returns.
Having large amounts of different grades on ore stockpile gives the
Company the ability to initially feed high-grade ore and quickly
ramp up production to name-plate capacity once the plant is
commissioned.
Plant Update
Construction of the New Luika plant is well advanced after a
delay caused by new Tanzanian importation laws, which have
restricted the Company's ability to get materials and key
infrastructure to site. Almost all key infrastructure is now on
site and under construction.
The New Luika processing plant is a conventional carbon-in-leach
("CIL") plant utilising two ball mills and seven leach tanks. The
plant will have name-plate capacity of 50 tph with scope to easily
increase capacity with minimal additional infrastructure and
expenditure, which will be supported by the updated resource
estimate expected during Q2.
As of the date of this announcement, the crushing circuit is
complete and the milling and leaching circuits are under
construction. Completion of the geological on-site laboratory is
currently expected by the end of May, which will greatly assist
with the quick turnaround of assay samples for grade and
metallurgical controls. Power cabling and pumps are expected on
site imminently as well as a contractor-owned wet screen. The plant
is powered by six diesel generator sets with capacity of 8.5 Mwt,
construction of which is now complete. The Company has completed
construction of a weir on the nearby Luika River, which will
provide a consistent source of water for the plant as well as for
local farmers.
Cold commissioning of the New Luika plant is currently expected
in mid-Q2 with hot commissioning currently expected by the end of
Q2. The key driver of the timetable to first gold pour is the
construction of the high security gold room. First gold production
is currently expected mid-Q3 with first cash receipts by the end of
Q3 and run-rate production of approximately 6,000 ounces of gold
per month currently expected to be achieved during Q4.
Working Capital Update
The Company's working capital requirements have increased as a
result of the extended period of mining without revenues from gold
production as well as the stockpiling of chemicals including
cyanide and carbon to avoid possible disruptions once gold
production commences. The extended plant construction timetable is
largely a result of new importation laws, which have restricted the
Company's ability to get key infrastructure to site. The overall
cost of plant construction and materials remains unchanged. In
order to meet the increased working capital requirements, the
Company has a number of funding options under consideration
including debt and equity financing. The Company also has the
option of utilising the undrawn GBP6 million (c.$9.5 million)
standby equity distribution facility put in place in January 2012,
subject to the terms of use already published. The increased
stockpile as a result of mining prior to gold production gives the
Company optionality as it relates to the grade of initial mill feed
and enables the Company to generate strong early revenue inflows
using high grades and further maximise the returns of the New Luika
Gold Mine.
Competent Person Statement
Braam (J.A.C.) Jankowitz, M.Sc., Pr.Nat.Sci. (400127/93),
Shanta's General Manager NLGM and a qualified person as defined in
the Guidance Note for Mining, Oil and Gas Companies, June 2009, of
the London Stock Exchange, has reviewed and approved the technical
information contained in this announcement.
Enquiries:
Shanta Gold Limited Tel: +255 (0) 22 2601 829
Walton Imrie / Gareth Taylor
Nominated Adviser and Broker
Liberum Capital Limited Tel: + 44 (0)20 3100 2000
Michael Rawlinson / Clayton Bush
/ Christopher Kololian
Public Relations
Tavistock Communications Tel: +44 (0) 20 7920 3150
Emily Fenton / Ed Portman
About Shanta Gold Limited
Shanta Gold is a Tanzania focussed gold explorer and mine
developer. It currently has defined ore resources on the New Luika,
Singida and Mgusu projects and holds exploration licences over a
number of additional properties. The New Luika Gold Mine is
currently under construction and is expecting first production in
2012. The Company is admitted to trading on AIM and has
approximately 271 million shares in issue.
For further information visit the Company's
website:www.shantagold.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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