SHG.L Regulatory News (SHG)

18 October 2012

THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL

Neither this Announcement nor any part of it constitutes an offer to sell or issue or the solicitation of an offer to buy, subscribe or acquire any new ordinary shares or any securities in any jurisdiction in which any such offer or solicitation would be unlawful and the information contained herein is not for publication or distribution, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, Japan, South Africa or any jurisdiction in which such publication or distribution would be unlawful. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933 (as amended), under the securities legislation of any state of the United States or under the applicable securities laws of Australia, Canada, Japan or South Africa.

SHANTA GOLD LIMITED(incorporated and registered in the Island of Guernsey under number 43133)("Shanta" or the "Company")

Shanta announces oversubscribed $35m equity financing

Further to the announcement yesterday, Shanta is pleased to announce that 127,988,856 new ordinary shares ("Ordinary Shares") in the Company (the "Placing Shares") have been successfully placed by Liberum Capital Limited ("Liberum Capital") with institutional and other investors (the "Equity Placing").

The placing price has been set at 17 pence per share (the "Placing Price"). The Placing Price is equivalent to a 18.6% discount to the closing mid-market price of an Ordinary Share on the AIM market of the London Stock Exchange plc ("AIM") on 16 October 2012. Accordingly, subject to the satisfaction of certain conditions, the Equity Placing will raise gross proceeds of approximately £21.8 million (approximately US$35 million). The Placing Shares represent approximately 38% of Shanta's issued share capital prior to the Equity Placing.

Mike Houston, CEO of Shanta, commented:

"Having to raise equity finance at the beginning of my tenure as CEO has not been an ideal start. However I have been hugely encouraged by the levels of support we have received from the vast majority of our existing shareholders, and from a wide range of new institutional shareholders. We have executed a well oversubscribed financing which will now allow us to deliver on our business plan; whilst also bringing on valuable new board members and advisors in the process. On a more personal level, I particularly welcome the significant investments made by members of our operational management team. To my mind this is a strong endorsement of our collective belief in the Shanta story."

73,529,412 Placing Shares (the "Firm Placing Shares") have been placed firm and are to be issued by the Company further to the directors' authority to allot Ordinary Shares for cash on a non-pre-emptive basis (the "Firm Placing"). An additional 54,459,444 Placing Shares (the "Conditional Placing Shares") have been placed with investors conditional on shareholder approval of resolutions to increase the authorised share capital of the Company and to authorise the directors of the Company to allot authorised but unissued shares (the "Shareholder Resolutions") at a general meeting of the Company to be convened on or around 14 November 2012 (the "General Meeting") (the "Conditional Placing").

The Company will be applying for admission of the Firm Placing Shares to trading on AIM ("First Admission"). It is expected that admission to trading or quotation and listing of the Firm Placing Shares on AIM will take place on or around 22 October 2012. Following First Admission there will be 407,368,023 Ordinary Shares in issue.

The Company will also apply for admission of the Conditional Placing Shares, the issue of which is subject to shareholder approval of the Shareholder Resolutions, to trading on AIM ("Second Admission"). It is expected that admission to trading or quotation and listing of the Conditional Placing Shares on AIM will take place on or around 15 November 2012. Following Second Admission there will be 461,827,467 Ordinary Shares in issue.

The Placing Shares will, when issued, be credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid after First Admission or Second Admission (as applicable) in respect of the Ordinary Shares then in issue and will otherwise rank on First Admission or Second Admission (as applicable) pari passu in all respects with the existing ordinary shares of the Company.

Following the publication of a circular which will contain a notice convening the General Meeting, the timing of the admission and settlement of the Conditional Placing Shares will be confirmed.

The Firm Placing is conditional, among other things, upon First Admission becoming effective. The Conditional Placing is conditional, among other things, upon shareholder approval of the Shareholder Resolutions at the General Meeting and First Admission and Second Admission becoming effective. The Firm Placing is not conditional on the Conditional Placing.

In addition to commission to be paid to Liberum Capital in connection with the Equity Placing, the Company has agreed to grant a warrant to Liberum Capital (or to such person as Liberum Capital shall direct) conditional on First Admission, over 6,399,443 Ordinary Shares (the "Warrants") exercisable at any time within three years of grant with an exercise price per Ordinary Share equal to the Placing Price.

Related Party Transactions

Shanta's Non Executive director, Ketan Patel (together with entities affiliated to him) has agreed to subscribe for 10,960,906 Conditional Placing Shares in the Equity Placing. Following this subscription, Ketan Patel's beneficial holding in the Company (together with entities affiliated to him) will increase to 45,005,484 Ordinary Shares representing 9.74% of the enlarged issued share capital of the Company following Second Admission.

In addition to Ketan Patel's participation in the Equity Placing, Edward Johnstone (Director) and Michael Houston (Director) of the Company have agreed to subscribe for respectively 45,000 and 182,682 Ordinary Shares in the Conditional Placing. Following these subscriptions, Edward Johnstone's and Michael Houston's beneficial holdings in the Company will be, respectively, 250,000 Ordinary Shares representing 0.05 per cent and 182,682 Ordinary Shares representing 0.04 per cent of the enlarged issued share capital of the Company following Second Admission.

The placing of these new Ordinary Shares to the above directors is classified as a transaction with a related party for the purposes of Rule 13 of the AIM Rules for Companies. In accordance, therefore, with the AIM Rules, the directors of the Company, with the exception of Edward Johnstone, Michael Houston and Ketan Patel, having consulted with the Company's nominated adviser, Liberum Capital, consider that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

Adjustment to 8.5% Convertible Loan Notes 2017 (the "Notes")

In accordance with the Terms and Conditions of the Notes, an adjustment is required to be made to the Conversion Price (as defined in the Terms and Conditions) as a consequence of the Placing Price and the exercise price of the Warrants being set at a price which is less than 90% of the Current Market Price (as defined in the Terms and Conditions). The Conversion Price is currently £0.2953. With effect from Second Admission the Conversion Price will be adjusted to £0.2795.

Enquiries:

This Announcement is for information only and does not contain or constitute an offer of, or the solicitation of an offer to buy, securities in Australia, Canada, Japan, South Africa or the United States or any jurisdiction in which the same would be unlawful. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "US Securities Act"), under the securities legislation of any state of the United States or under the applicable securities laws of Australia, Canada, Japan or South Africa. The securities referred to herein may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada, Japan or South Africa or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, Japan or South Africa. Any failure to comply with these restrictions may constitute a violation of U.S., Australian, Canadian, Japanese or South African securities laws, as applicable. No public offer of the Company's securities is being or will be made in the United Kingdom, the United States, Australia, Canada, Japan, South Africa or elsewhere. No action has been taken by the Company or Liberum Capital that would permit an offering of the securities referred to herein or possession or distribution of this Announcement or any other offering or publicity material relating to such securities in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and Liberum Capital to inform themselves about, and to observe, any such restrictions.

This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Liberum Capital or by any of their respective affiliates or agents as to or in relation to the accuracy or completeness of this Announcement, or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is hereby expressly disclaimed.

Liberum Capital, which is authorised and regulated by the Financial Services Authority ("FSA") is acting for the Company in connection with the Equity Placing and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Liberum Capital or for providing advice in relation to the Equity Placing.

This Announcement is not for publication or distribution, in whole or in part, directly or indirectly, in or into the United States, Canada, Australia, Japan, South Africa or any jurisdiction in which the same would be unlawful.

Certain statements in this Announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The information contained in this Announcement is subject to change without notice and neither the Company nor Liberum Capital assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

Any indication in this Announcement of the price at which Ordinary Shares have been placed cannot be relied upon as a guide to future performance.

END