SHG.L Regulatory News (SHG)

29 March 2012

Shanta Gold Limited

("Shanta Gold" or the "Company")

New Luika Gold Mine Progress Update

The Directors of Shanta Gold Limited (AIM: SHG) are pleased to provide a progress update on the New Luika Gold Mine following an analyst site visit.

Highlights:

§ Stockpiled ore estimated to contain over 13,000 ounces of gold available for processing since commencement of ore mining in November 2011

§ Plant construction well advanced with hot commissioning expected by the end of Q2

§ First gold production expected mid-Q3 and first cash receipts expected by the end of Q3

§ Updated resource statement expected during Q2 to drive potential increase in plant capacity and production profile.

Walton Imrie, Executive Chairman, said:

"Shanta Gold is at a transformational stage in the history of the Company and is fast approaching first production from the New Luika Gold Mine which is now expected by mid-Q3. Almost all key infrastructure is now on site and construction of the plant is well advanced. Our desire to reinforce security measures with the addition of a high security gold room has added approximately one month to the construction timetable, which we believe is in the Company and shareholders' interests. The extended timetable has increased working capital requirements; however, we have a number of options in place as demonstrated by our ability to source low-cost debt capital and the enlarged and untapped equity distribution facility announced in January of this year."

Gareth Taylor, Chief Executive Officer, said:

"Shanta Gold has been very active on the ground at the New Luika Gold Mine. We commenced ore mining in November 2011 and now have approximately 100,000 tonnes of high-grade ore, estimated to contain over 13,000 ounces of gold, readily available to feed the plant immediately upon commissioning, thereby maximising the project's returns. There are over 500 people currently employed at New Luika of which 200 people are based in camp and I am proud to report that the project has achieved over 1 million injury-free man hours to date. The updated New Luika resource statement expected during Q2 will allow Shanta Gold to explore the possibility of increasing the plant capacity and increase near-term production, which the directors believe should further improve the project's economics."

Mining Update

The New Luika Gold Mine ("New Luika") based in the Lupa goldfields in southwest Tanzania will be Shanta Gold's first producing mine. The Bauhinia Creek and Luika open pits will together feed a centralised 50 tonne per hour ("tph") processing plant. Pre-stripping at the open pits commenced in April 2011 and first ore production commenced in November 2011. Both pits have high-grade gold-bearing gravels at surface, which have been stockpiled along with initial primary ore from Bauhinia Creek. Excluding approximately 11,000 tonnes ("Kt") of stockpiled Bauhinia Creek gravels which are awaiting test results, the Company has stockpiled over 41 Kt of ore plus 48 Kt of unscreened gravels, in total 89 Kt with an average grade of 4.6 g/t estimated to contain over 13,000 ounces of gold. A further 30 Kt of primary ore with an average grade of 4.8 g/t estimated to contain approximately 4,500 ounces of gold are exposed and available to mine at Bauhinia Creek.

The Company is actively mining and drilling the Bauhinia Creek pit using an external contractor's fleet that includes ten 40-tonne dump trucks, six excavators, five dozers, and three blasthole rigs, amongst other equipment. The current Bauhinia Creek mine plan envisages a 120 m deep open pit operation. Based on the encouraging exploration results announced in January 2012, the Company has considered an enlarged conceptual Bauhinia Creek pit to a depth of 200 m. Bauhinia Creek has so far been mined to a depth of 25 m at its lowest point with over 1 million m3 of ore and waste mined by the Company.

Construction of the tailings dam has been completed with initial capacity for almost the first three years of production.

The Company's decision to begin mining prior to completion of the plant was driven by a desire to increase the project's returns. Having large amounts of different grades on ore stockpile gives the Company the ability to initially feed high-grade ore and quickly ramp up production to name-plate capacity once the plant is commissioned.

Plant Update

Construction of the New Luika plant is well advanced after a delay caused by new Tanzanian importation laws, which have restricted the Company's ability to get materials and key infrastructure to site. Almost all key infrastructure is now on site and under construction.

The New Luika processing plant is a conventional carbon-in-leach ("CIL") plant utilising two ball mills and seven leach tanks. The plant will have name-plate capacity of 50 tph with scope to easily increase capacity with minimal additional infrastructure and expenditure, which will be supported by the updated resource estimate expected during Q2.

As of the date of this announcement, the crushing circuit is complete and the milling and leaching circuits are under construction. Completion of the geological on-site laboratory is currently expected by the end of May, which will greatly assist with the quick turnaround of assay samples for grade and metallurgical controls. Power cabling and pumps are expected on site imminently as well as a contractor-owned wet screen. The plant is powered by six diesel generator sets with capacity of 8.5 Mwt, construction of which is now complete. The Company has completed construction of a weir on the nearby Luika River, which will provide a consistent source of water for the plant as well as for local farmers.

Cold commissioning of the New Luika plant is currently expected in mid-Q2 with hot commissioning currently expected by the end of Q2. The key driver of the timetable to first gold pour is the construction of the high security gold room. First gold production is currently expected mid-Q3 with first cash receipts by the end of Q3 and run-rate production of approximately 6,000 ounces of gold per month currently expected to be achieved during Q4.

Working Capital Update

The Company's working capital requirements have increased as a result of the extended period of mining without revenues from gold production as well as the stockpiling of chemicals including cyanide and carbon to avoid possible disruptions once gold production commences. The extended plant construction timetable is largely a result of new importation laws, which have restricted the Company's ability to get key infrastructure to site. The overall cost of plant construction and materials remains unchanged. In order to meet the increased working capital requirements, the Company has a number of funding options under consideration including debt and equity financing. The Company also has the option of utilising the undrawn £6 million (c.$9.5 million) standby equity distribution facility put in place in January 2012, subject to the terms of use already published. The increased stockpile as a result of mining prior to gold production gives the Company optionality as it relates to the grade of initial mill feed and enables the Company to generate strong early revenue inflows using high grades and further maximise the returns of the New Luika Gold Mine.

Competent Person Statement

Braam (J.A.C.) Jankowitz, M.Sc., Pr.Nat.Sci. (400127/93), Shanta's General Manager NLGM and a qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies, June 2009, of the London Stock Exchange, has reviewed and approved the technical information contained in this announcement.

Enquiries:

About Shanta Gold Limited

Shanta Gold is a Tanzania focussed gold explorer and mine developer. It currently has defined ore resources on the New Luika, Singida and Mgusu projects and holds exploration licences over a number of additional properties. The New Luika Gold Mine is currently under construction and is expecting first production in 2012. The Company is admitted to trading on AIM and has approximately 271 million shares in issue.

For further information visit the Company's website:www.shantagold.com.