(Alliance News) - Shanta Gold Ltd on Monday said it swung to profit in the first half of 2020 as increased production and a substantially higher gold price boosted performance.
Shares in Shanta were up 6.1% at 17.50 pence in London at midday.
The east Africa-focused gold producer, with operations in Tanzania, posted a USD15.3 million pretax profit for the six months ended June 30, swinging from a USD4.1 million loss a year before.
Revenue jumped 36% to USD73.0 million from USD53.6 million.
This came as gold sales increased 7.2% to 44,018 ounces from 41,049 ounces the prior year, and the average realised price rose by 17% to USD1,533 per ounce, including realised losses on forward sales commitments. In the first half of 2019, the average price was USD1,306 per ounce.
Gold production was 42,383 ounces, up 0.4% from 42,230 ounces a year ago, in line with Shanta's annual production guidance of between 80,000 and 85,000 ounces.
So far, Shanta's operational productivity has been unaffected by Covid-19, it said, and precautionary measures are in place to minimise risks.
On Wednesday last week, post half-year end, Shanta completed its acquisition of the West Kenya project from Barrick Gold Corp. The fully financed purchase price included USD7 million in cash plus USD7.5 million in Shanta shares issued to Barrick at 10.5p, as well as a 2% net smelter royalty on future gold production.
Chief Executive Eric Zurrin said: "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 focused 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."
By Anna Farley; annafarley@alliancenews.com
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Shanta Gold (SHG)