28 Sep 2012 12:45
28 September 2012
Shanta Gold Limited
("Shanta Gold" or "the Company")
Interim Results for 6 months to 30 June 2012
Shanta Gold (AIM:SHG), the East African focused emerging gold producer, is pleased to announce its results for the six months ended 30 June 2012.
Highlights
Operational:
·; Successful construction and wet commissioning of the New Luika plant
·; Exceptional New Luika drilling results including 31m at 12.97g/t Au at Bauhininia Creek
·; Continued mining and stock piling of high grade ore to feed plant on full commissioning
Corporate:
·; $20 million in loan facilities arranged on favourable terms with multiple lenders
·; $40 million successfully raised by way of concurrent convertible loan note and equity placings
·; Increase in the undrawn standby equity distribution agreement to £6 million
·; Appointment of Liberum Capital as the Company's Nomad and Broker
Post Period Highlights
Operational:
·; Milestone first gold pour achieved in August 2012
·; New Luika resources increased by 52% to 1.48Moz Au with an average grade of 3.22 g/t
·; Encouraging exploration results within the Shanta Gold-Great Basin Gold Joint Venture
Corporate:
·; Strengthening of Board of Directors with the appointment of Mike Houston as CEO commencing 1 October 2012 and Nick Davis as Non-Executive Director
Commenting on the results Walton Imrie, Shanta Gold Chairman, said: "The first half of 2012 was a watershed period for Shanta Gold. We completed construction of the plant at our flagship New Luika Gold Mine. The success of the exploration programme within the New Luika mining licence area gives Shanta Gold considerable upside to the current mine plan. On the corporate front, we significantly strengthened the Company's finances through a combination of debt, convertible bond and equity financings on favourable terms and welcomed many new blue chip institutional investors onto our register.
"Since the period end, Shanta Gold achieved the historic milestone of moving from a greenfield exploration company to a gold producer. I am very excited about the longer-term outlook of Shanta Gold, especially in light of the highly promising exploration results and resource update which point to the quality of the licences that we are developing. Over the remainder of the year, Shanta Gold will see a ramp up in production at New Luika and will be updating shareholders with its mining and financing plans in due course.
"On 23 August, we were delighted to announce the appointment of Mike Houston as our new Chief Executive Officer as from 1 October. Mike brings a wealth of mining experience in Africa, which will be particularly valuable to Shanta Gold as it emerges as a full scale production company.
"As part of these board changes, I will become a non-Executive Chairman as from 1 October and Gareth Taylor, the current Chief Executive Officer, has kindly agreed to remain with the Group and on the Board as Technical Director, where his extensive experience in many types of mining operation throughout Africa will continue to be of great benefit to Shanta Gold. Nick Davis, who has advised Shanta Gold since our flotation in 2005 in his capacity as corporate lawyer at Memery Crystal in London, has also joined the Board as non-Executive Director. He brings very valuable London-based experience of the African natural resource sector."
New Luika Gold Mine
During the period Shanta Gold successfully completed wet commissioning of the New Luika plant. The on-site laboratory was fully commissioned which allowed for the quick turnaround of assay samples for grade and metallurgical controls going forward. Pre-stripping and ore mining continued at the Bauhinia Creek and Luika pits and by the end of the period the Company had established ore and gravels stockpiles located at the plant, which were estimated to contain over 22,000 ounces of gold at that time. The Company continued its drilling programme within the New Luika mining licence with a specific focus on the initial mining areas. In January, the Company announced highly encouraging drilling results from the reverse circulation drilling programme, which included spectacular intersections including 31m at 12.97g/t and 10m at 26.9g/t at the Bauhinia Creek deposit. Based on the encouraging exploration results, the Company enlarged the conceptual Bauhinia Creek pit design to a depth of 200m from an original depth of 120m. The final assay results of the drilling programme were announced in May, which importantly identified an increase in both depth and strike expression of the Bauhinia Creek deposit.
Post the end of the period the Company successfully completed hot commissioning of the plant, commenced treatment of ore and produced carbon in pulp in July, followed by first gold pour in August. The Company is currently in the process of ramping up the plant to nameplate capacity of 75 tonnes per hour and is focused on optimising the plant in order to maximise recoveries and therefore gold production. In July the Company announced a significant increase in the New Luika mineral resource to 1.48Moz Au with an average grade of 3.22 g/t, which included an increase of over 80% in the Measured and Indicated categories to 0.84Moz with an average grade of 3.87 g/t (1.0 g/t cut-off). The Company has recently announced encouraging exploration results from the joint venture with Great Basin Gold Limited, which encompasses numerous licences extending over an area in excess of 2,500km2 in the highly prospective Lupa goldfields that surrounds the New Luika mine.
Other Projects
In the first half of the year preparations continued at Singida for the development of the established resource, the build for which is expected to commence in 2013.
Discussions with the Tanzanian Government and the Ministry of Energy and Minerals have been ongoing in regards to the Mgusu licence area and these have culminated in the Company taking the decision in September 2012 to relinquish all licences held and under application in the area referred to as Mgusu. The Company's decision follows on from the 2011 write-down of this investment to nil value and takes into account Mgusu's non-core positioning within the broader portfolio and the Company's desire to focus its resources on those areas that are likely to generate greatest shareholder value. Upon relinquishment of the Mgusu licences, the Company's revised Resource Statement will be as follows:
Measured and Indicated | Inferred | Total | |||||||
Project | Mt | g/t | Ounces | Mt | g/t | Ounces | Mt | g/t | Ounces |
New Luika | 6.7 | 3.87 | 835,484 | 7.6 | 2.64 | 647,905 | 14.3 | 3.22 | 1,484,390 |
Singida | 5.2 | 3.30 | 549,977 | 4.2 | 2.28 | 308,508 | 9.4 | 2.84 | 858,485 |
Total | 11.9 | 3.62 | 1,385,461 | 11.8 | 2.51 | 957,413 | 23.7 | 3.07 | 2,342,875 |
Financing
During the period Shanta Gold successfully arranged two debt financing facilities for total proceeds of $20 million. The Company entered into a $15 million facility with FBN Bank (UK) Ltd which bears interest at 7% over LIBOR and is repayable within 18 months. The Company also entered into a $5 million loan facility with YA Global Master SPV Ltd ("YAGM"). As part of the YAGM loan, the Company was able to secure an increase in the standby equity distribution agreement ("SEDA"), originally entered into in December 2009, from £3 million to £6 million. The Company repaid the $5 million loan facility from Export Trading Group as per the terms of the facility announced in December 2011. In April 2012 Shanta Gold successfully completed a $40 million fundraising, comprising of a $15 million equity placing and a concurrent $25 million underwritten 5-year convertible loan note offering. The convertible loan note has a coupon of 8.5% per annum and a conversion price of 29.53p, which represents a 25% conversion premium to the reference price prior to the transaction launch date of 23.63p per share.
Post the end of the period the Company increased its SEDA-backed loan facility with YAGM from $5 million to $6.2 million.
The Company is currently in discussions with various parties regarding future debt financing facilities for the Company's operations including meeting its working capital requirements during the ramp up period.
Competent Persons Statement
Braam (J.A.C.) Jankowitz, M.Sc., Pr.Nat.Sci. (400127/93), Shanta's General Manager at New Luika Gold Mine is a qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies, June 2009, of the London Stock Exchange, and has reviewed and approved the technical information contained in this announcement.
Enquiries:
Shanta Gold Limited | Tel: +255 (0) 22 2601 829 |
Walton Imrie / Gareth Taylor | |
Nominated Adviser and Broker | |
Liberum Capital Limited | Tel: + 44 (0)20 3100 2000 |
Michael Rawlinson / Simon Atkinson / Christopher Kololian | |
Financial Public Relations | |
FTI Consulting | Tel: +44 (0)20 7269 7100 |
Billy Clegg / Oliver Winters |
About Shanta Gold Limited
Shanta Gold is an East African focused gold mining company. It currently has defined ore resources on the New Luika and Singida projects in Tanzania and holds exploration licences over a number of additional properties. The Company's flagship New Luika Gold Mine commenced production and achieved first gold pour in August 2012. The Company is admitted to trading on AIM and has approximately 319 million shares in issue.
For further information visit the Company's website: www.shantagold.com.
Consolidated Statements of comprehensive income | |||
6 months | 6 months | Year end | |
30 June 2012 | 30 June 2011 | 31 December 2011 | |
US$' 000 | US$' 000 | US$' 000 | |
Revenue | - | - | - |
Cost of sales | - | - | - |
Gross Profit | - | - | - |
Other operating income | - | - | - |
Administration expenses | (3,793) | (1,611) | (4,969) |
Exploration and evaluation costs | (1,610) | (3,884) | (3,508) |
Impairment of intangible assets | - | - | (3,558) |
Operating loss | (5,403) | (5,495) | (12,035) |
Finance income | 43 | 11 | 28 |
Finance expense | (1,641) | - | (266) |
Loss before taxation | (7,001) | (5,484) | (12,273) |
Taxation | - | - | - |
Loss for the period / year | (7,001) | (5,484) | (12,273) |
Other comprehensive income for the period / year | - | - | - |
Total comprehensive loss for the period / year | (7,001) | (5,484) | (12,273) |
Earnings per share | |||
Basic loss per share (US cents) | (2.38) | (3.05) | (5.58) |
Consolidated Statements of financial position | |||
6 months | 6 months | Year end | |
30 June 2012 | 30 June 2011 | 31 December 2011 | |
US$' 000 | US$' 000 | US$' 000 | |
Non-current assets | |||
Intangible assets | 876 | 4,376 | 876 |
Property, Plant and equipment | 64,737 | 10,466 | 40,306 |
Total non-current assets | 65,613 | 14,842 | 41,182 |
Current assets | |||
Trade and other receivables | 10,862 | 2,915 | 3,748 |
Cash and cash equivalents | 15,892 | 3,467 | 572 |
Total current assets | 26,754 | 6,382 | 4,320 |
Total assets | 92,367 | 21,224 | 45,502 |
Equity | |||
Share capital | 53 | 30 | 45 |
Share premium | 95,197 | 56,495 | 81,029 |
Share option reserve | 2,582 | 1,307 | 1,722 |
Warrants to be issued | 150 | ||
Warrant reserve | 0 | 336 | - |
Convertible notes Equity Reserve | 5,494 | - | - |
Translation reserve | 400 | 400 | 400 |
Retained losses | (53,297) | (39,507) | (46,296) |
Total equity | 50,579 | 19,061 | 36,900 |
Current liabilities | |||
Trade and other payables and accruals | 3,340 | 1,827 | 6,129 |
Decommissioning provision | 1,054 | - | 1,014 |
Other loans | 18,873 | - | 1,123 |
Loans payable to related parties | 336 | 336 | 336 |
Convertible notes Loan | 18,185 | - | - |
Total liabilities | 41,788 | 2,163 | 8,602 |
Total equity and liabilities | 92,367 | 21,224 | 45,502 |
Consolidated Statements of cash flows | |||
| 6 months 30 June 2012 US$' 000 | 6 months 30 June 2011 US$' 000 | Year end 31 December 2011 US$' 000 |
Net cash flows from operating activities | (6,446) | (5,462) | (7,661) |
Investing activities | |||
Purchase of intangible assets | - | - | (58) |
Purchase of property, plant and equipment | (341) | (8,121) | (845) |
Assets under construction | (32,461) | - | (32,763) |
Net cash flows from investing activities | (32,802) | (8,121) | (33,665) |
Financing activities | |||
Proceeds from issue of ordinary share capital | 14,176 | - | 23,991 |
Proceeds from issue of convertible loan notes | 23,374 | - | - |
Loans repaid | (7,427) | - | (2,100) |
Loan interest paid | (555) | - | (104) |
Loans advanced | 25,000 | 3,060 | |
Net cash flows from financing activities | 54,568 | - | 24,847 |
Net increase / (decrease) in cash and cash equivalents | 15,320 | (13,583) | (16,479) |
Cash and cash equivalents at beginning of period / year | 572 | 17,050 | 17,050 |
Foreign exchange adjustment | |||
Cash and cash equivalents at end of period / year | 15,892 | 3,467 | 572 |
Consolidated Statements of changes in equity | ||||||||||
Share capital | Share option reserve |
Warrant reserve |
Warrants to be Issued |
Translation reserve |
Convertible Notes | Shares to be issued |
Total equity | |||
Share premium | Retained earnings | |||||||||
All US$' 000 | ||||||||||
Total equity | ||||||||||
31 December 2010 | 30 | 55,936 | 1,088 | 336 | 400 | 92 | (34,023) | 23,859 | ||
Total comprehensive loss for the year | ||||||||||
(12,273) | (12,273) | |||||||||
Share based payments | 638 | (59) | 579 | |||||||
Shares issued for cash | 14 | 24,263 | (33) | 24,244 | ||||||
Share issue costs | (1,265) | (1,265) | ||||||||
Share option costs | 736 | 736 | ||||||||
Warrants exercised | 1 | 1,249 | (336) | 914 | ||||||
Share options expired | 208 | (102) | 106 | |||||||
Total equity | ||||||||||
31 December 2011 | 45 | 81,029 | 1,722 | - | 400 | - | - | (46,296) | 36,900 | |
Total comprehensive | ||||||||||
loss for the year | (7,001) | (7,001) | ||||||||
Share option costs | 860 | 860 | ||||||||
Warrants to be issued | 150 | 150 | ||||||||
Shares issued for cash | 8 | 15,027 | 15,035 | |||||||
Share issue costs | (859) | (859) | ||||||||
8.5% Convertible Notes due 2017 | 5,494 | 5,494 | ||||||||
Total equity | ||||||||||
30 June 2012 | 53 | 95,197 | 2,582 | - | 150 | 400 | 5,494 | - | (53,297) | 50,579 |
Notes to the Accounts
1. Basis of preparation
The consolidated unaudited results for the group have been prepared using the same accounting policies and principles as the financial statements as at 31 December 2011 with the exception of the policy adopted for the convertible loan notes issued in the period as detailed below.
Convertible Loan Note
Convertible loan notes are assessed in accordance with IAS 32 Financial Instruments: Presentation to determine whether the conversion element meets the fixed-for-fixed criterion. Where this is met, the instrument is accounted for as a compound financial instrument with appropriate presentation of the liability and equity components. Where the fixed-for-fixed criterion is not met, the conversion element is accounted for separately as an embedded derivative which is measured at fair value through profit or loss. In the Consolidated balance sheet, this is presented separately as a derivative instrument.
On issue of a convertible borrowing, the fair value of the liability component is determined by discounting the contractual future cash flows using a market rate for a non-convertible instrument with similar terms. This value is carried as a liability on the amortised cost basis until extinguished on conversion or redemption. The remainder of the proceeds are allocated, net of issue costs, to a separate component of equity or a separate liability. Issue costs are apportioned between the components based on their respective carrying amounts when the instrument was issued.
On conversion, the liability is reclassified to equity and no gain or loss is recognised in the profit or loss. Where the convertible borrowing is redeemed early or repurchased in a way that does not alter the original conversion privileges, the consideration paid is allocated to the respective components and the amount of gain or loss relating to the liability element in profit or loss. The finance costs recognised in respect of the convertible borrowings includes the accretion of the liability.
2. Earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows:
6 months | 6 months | Year end | |
30 June 2012 | 30 June 2011 | 31 December 2011 | |
US$' 000 | US$' 000 | US$' 000 | |
Earnings per share | |||
Loss for the year attributable to equity holders of the Company | (7,001) | (5,484) | (12,273) |
Earnings used in the calculation of basic loss per share as presented below | (7,001) | (5,484) | (12,273) |
Basic loss per share (US cents) | (2.38) | (3.05) | (5.58) |
Weighted average number of shares in issue | 294,411,042 | 179,551,495 | 219,797,684 |
IAS 33 "earnings per share" defines dilution as a reduction in earnings per share, or as an increase in loss per share. When calculating the dilutive earnings per share the loss is decreased. Accordingly, dilutive loss per share is not disclosed.
6 months | 6 months | Year end | |
30 June 2012 | 30 June 2011 | 31 December 2011 | |
Number | Number | Number | |
The group has the following instruments which could potentially dilute basic earnings per share in the future. | |||
8.5% Convertible notes due 2017 | 53,325,000* | - | - |
Share options | 15,896,564 | 6,934,064 | 12,866,564 |
Warrants | 465,405 | 5,770,016 | - |
*on the assumption of full conversion
The Company has entered into a SEDA agreement under the terms of which the Company may raise funds by the issue of shares. The SEDA agreement could potentially dilute basic earnings per share in the future.
On 6th April 2012 the Company raised a total of $15m (before expenses) through the issue of 47,258,980 shares to new and existing institutional shareholders.
3. Related party transactions
Directors' remuneration | |||
6 months | 6 months | Year end | |
30 June 2012 | 30 June 2011 | 31 December 2011 | |
US$' 000 | US$' 000 | US$' 000 | |
Walton Norman Brian Imrie | 195 | 195 | 385 |
Paul David Heber | 20 | 21 | 94 |
Ketankumar Vinubhai Patel | 20 | 21 | 94 |
Gareth Taylor | 150 | 180 | 300 |
Walter David Scott (former director) | - | 91 | 91 |
Walter Egmund Vorwerk (former director) | - | 144 | 393 |
Maheshkumar Raojibhal Patel (alternate director) | - | - | - |
DIRECTORS INTERESTS
The interest of the directors (all of which are beneficial) in the issued ordinary share capital of the Company are as follows:
30 June 2012 | 31 December 2011 | |||
Number each of ordinary shares | % | Number each of ordinary shares | % | |
Walton Norman Brian Imrie | 10,139,760 | 3.19 | 10,161,241 | 3.74 |
Paul David Heber | 357,468 | 0.35 | 256,933 | 0.09 |
Ketankumar Vinubhai Patel | 16,022,289 | 5.03 | 13,659,340 | 5.03 |
Gareth Taylor | 1,110,009 | 0.35 | 831,490 | 0.31 |
Walter David Scott (former director) | n/a | n/a | n/a | n/a |
Walter Egmund Vorwerk (former director) | n/a | n/a | 1,019,277 | 0.38 |
Maheshkumar Raojibhal Patel (alternate) director) | 16,022,289 | 5.03 | 13,659,340 | 5.03 |
Share Options | |||
The following share options have been granted to existing or former directors under the Share Option Plan: | |||
Number of | Option | ||
Grant date | share options | price | |
Walton Norman Brian Imrie | 29 July 2005 | 168,006 | 25p |
Walton Norman Brian Imrie | 7 Sept 2009 | 350,000 | 6p |
Walton Norman Brian Imrie | 16 Nov 2010 | 250,000 | 28.25p |
Walton Norman Brian Imrie | 26 Oct 2011 | 250,000 | 25p |
Walton Norman Brian Imrie | 26 Oct 2011 | 750,000 | 30p |
Walton Norman Brian Imrie | 26 Oct 2011 | 1,000,000 | 35p |
Gareth Taylor | 16 Nov 2010 | 125,000 | 28.25p |
Gareth Taylor | 26 Oct 2011 | 250,000 | 25p |
Gareth Taylor | 26 Oct 2011 | 750,000 | 30p |
Gareth Taylor | 26 Oct 2011 | 1,000,000 | 35p |
Ketankumar Vinubhai Patel | 29 July 2005 | 168,006 | 25p |
Ketankumar Vinubhai Patel | 7 Sept 2009 | 150,000 | 6p |
Nicholas Davis | 23 Aug 2012 | 250,000 | 25p |
Nicholas Davis | 23 Aug 2012 | 500,000 | 30p |
Nicholas Davis | 23 Aug 2012 | 500,000 | 35p |
Walter David Scott (former director) | 7 Sept 2009 | 250,000 | 6p |
Walter David Scott (former director) | 16 Nov 2010 | 250,000 | 28.25p |
Walter Egmund Vorwerk (former director) | 29 July 2005 | 466,685 | 25p |
Walter Egmund Vorwerk (former director) | 14 July 2006 | 363,718 | 59p |
Walter Egmund Vorwerk (former director) | 7 Sept 2009 | 350,000 | 6p |
Walter Egmund Vorwerk (former director) | 16 Nov 2010 | 250,000 | 28.25p |
Walter Egmund Vorwerk (former director) | 26 Oct 2011 | 250,000 | 25p |
Maheshkumar Raojibhal Patel (alternate director) | 29 July 2005 | 168,000 | 25p |
The option plan was adopted by the board of directors on 1 July 2005. Details of the option plan are available at the Company's registered office. No directors' options lapsed as a result of vesting conditions not being met. No directors' options were exercised during the period.
Other related parties transactions
The loans from related parties taken out in December 2011 from the company in which KV Patel and MR Patel had an interest was repaid in the period in line with the agreement. A further $60,000 of service fees for importation services were also paid to this company. Shanta paid consultancy fees of $102,000 for security consulting services to a company in which Gareth Taylor had an indirect minority interest.