AMN - TANZANIA: Shanta continues New Luika ramp-up

Shanta Gold continues to ramp-up operations at its New Luika Gold Project in Tanzania, as it reviews its business plan amid changing legislation in the African country. The changes have resulted in Shanta terminating a previous agreement to purchase Helio Resource Corp.

The company said that as a result of the potential impact on Helio of the bills signed into law in Tanzania on July 10, 2017, and after having taken professional advice, it would not be acquiring all of the issued and outstanding common shares of Helio, which owns land next to New Luika.

Gold shipments now attract higher royalty rates of 6%, up from 4% previously, and a clearing fee of 1% has been applied.

Shanta has repeated its output guidance for 2017 of between 80,000 and 85,000 gold ounces and ASIC of between US$800 and US$850 per ounce.

Production in the first six months of 2017 was 40,073 ounces compared to 48,237 ounces in the same period last year, leading to revenues of US$52.7 million compared to US$55.7 million in 2016.

In the six months, the firm sold 41,234 ounces of gold at an average price of US$1257 per ounce, compared to average spot price of US$1239 per ounce.

The company's new CEO Eric Zurrin said "Progress at New Luika has continued to be extremely pleasing.

"Underground development has now reached 4.4km in just over 13 months which is a testament to the skills and professionalism of the entire team. The transition to the underground mine remains on track and continues to be de-risked as more stopes are opened up and critical equipment arrives at site.

“Shanta crossed the 40,000 ounce gold production mark during the first half of the year and is on track to meet the full year production guidance.”

The New Luika Gold Mine commenced production in 2012 and produced 87,713 ounces in 2016.

The new CEO, who replaced Toby Bradbury after he stepped down, also noted that a completed US$14 million share placing provided increased financial flexibility and reduced outstanding working capital requirements.

"Tanzania continues to undergo a period of uncertainty and Shanta is responding with proactive decisions around its cost structure.

"The company will update the market in due course with details of its ongoing and one-time efficiencies and cost improvements. Tanzania remains one of the fastest growing countries globally and Shanta is well positioned for the longer term."

www.shantagold.com