LONDON (Alliance News) - Shanta Gold Ltd Monday said it will achieve its full year production target at a lower cost than originally thought, after it increased production at lower costs during the third quarter from its Luika gold mine in Tanzania.
Shanta shares were up 9.3% to 9.70 pence per share Monday morning.
During the third quarter ended September 30, Shanta produced 22,720 ounces of gold, up 4% from the previous quarter when it produced 21,940 ounces. It sold 18,600 ounces of gold at an average price of USD1,306 per ounce, with a further 3,600 ounces in transit at the end of the quarter, it said in a statement.
The company generated USD14.6 million in revenue during the quarter, which funded USD8 million of capital expenditure during the quarter and repaying USD3.2 million of loans, it said.
At the end of the quarter, Shanta reported a cash balance of USD18.7 million and a reduction in net debt to USD40 million compared to USD46 million at the end of the second quarter.
Its cash cost for the third quarter was reduced to USD671 per ounce compared to USD755 per ounce in the second quarter, with an all in cash cost of USD873 per ounce, down from USD959 per ounce. Shanta has revised its all in cash cost for the full year to be between USD900 and USD950 per ounce, compared to its original target between USD900 and USD1,000 per ounce.
The company reaffirmed its full year production target of 80,000 to 83,000 ounces of gold.
"We remain confident of achieving the 2014 production guidance at a lower cost than previously expected," said Chief Executive Mike Houston.
Shanta also reported forward sales from October to March 2015 of 21,000 ounces at an average price of USD1,316 per ounce,
In a separate statement, the company reported an updated JORC mineral resource for the Bauhinia Creek, Luika and Ilunga targets at its Luika gold mine in Tanzania. Shanta reported a 3% increase for its indicated resource, which stands at 814,000 ounces of gold with an average grade of 4.5 grammes per tonne and an inferred resource of 221,000 ounces with an average grade of 2.3 grammes per tonne, an increase of 12%.
The probable ore reserve at the end of September stood at 4.95 million tonnes at 4.33 grammes per tonne of gold for 690,000 ounces, it said.
"We are very encouraged by the resource and reserve upgrade announced today which clearly highlights that Shanta has a minimum life beyond 2014 of seven years," said Houston. Shanta is expected to release a detailed life of mine plan for the gold mine in the middle of November.
Shanta is holding talks with potential debt financiers regarding funding to extend the Luika gold mine's life extension following the updated mineral resource, which it expects to conclude by the end of the calendar year, said Shanta.
"We have successfully upgraded the resource at Bauhinia Creek and Luika to allow an increased reserve to be declared and provide the base for an extension to the life of mine. The additional ounces discovered at Bauhinia Creek effectively replace the depleted mined ounces to date and this exciting orebody remains open to the west and at depth with inferred ounces up 12%," said Chief executive Mike Houston.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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