(Alliance News) - Shanta Gold Ltd on Monday said it has cut 2021 production guidance for its New Luika mine in Tanzania.
Shares in Shanta Gold were down 27% at 11.75 pence each in London on Monday afternoon.
Guernsey-based Shanta Gold is an East Africa-focused gold producer, developer and explorer.
Gold production in the second quarter was 14,201 ounces, down 3.0% from 14,641 ounces in the prior quarter, with the production being restricted by lower than anticipated grades from underground mining, Shanta said.
The company's five-year production plan incorporates negative grade reconciliation at Bauhinia Creek, which is part of New Luika.
Shanta said that underground mining at Bauhinia intersected a structure that dragged and pinched the ore zone for approximately 17 metres along strike at 600 level and approximately 37 metres at 585 level.
"Grade control drilling has confirmed that the impact is limited to a zone spanning 30 metres along strike and 40 metres down dip resulting in a loss of approximately 16,000 ounces which formed part of the 2021 mining schedule," the company said.
Moreover, Shanta has deferred mining of newly discovered ounces at Luika and Bauhinia East Area 1, previously expected for the second half of 2021, until 2022 and 2023.
As a result, New Luika annual production guidance has since been revised to between 60,000 oz and 65,000 oz, down from 80,000 oz.
Shanta also said they forecast group-wide gold production from Tanzanian assets to be approximately 499,000 oz for the five-year period, starting from the second half of 2021, to the first half of 2026.
Group-wide gold reserves as at June 30 were 666,000 oz with grading 2.99 grams per tonne.
"Whilst we are looking forward to the future, we are disappointed that we will be reducing this year's production guidance to [between] 60,000 and 65,000 oz. Whilst this is partly due to a deferral of ounces to 2022 onwards, it is not the outcome we hoped for this year. Our softer production for the second quarter has also meant that our revenues have been slightly reduced for the quarter but we are pleased to confirm that we have received USD4.2 million in VAT offsets as we work with the Tanzanian government to clear the outstanding balance," said Chief Executive Eric Zurrin.
By Amrit Sahota; newsroom@alliancenews.com
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Shanta Gold (SHG)