AMN - TANZANIA: Shanta cuts costs at New Luika

Shanta Gold has reduced production costs at the New Luika Gold Project in southwest Tanzania during the June quarter with further reductions expected in the remainder of 2018.

On a sustaining basis, costs were US$748 per ounce, down from $776 in the March quarter. Costs are expected to drop to within a range of US$680-730 by the end of the year.

Shanta's chief executive officer Eric Zurrin said: "The cost saving initiatives that were executed in Q4 2017 are now beginning to have a significant impact on both costs and cash flow. The full effect of additional savings executed in Q2 2018 will be seen over the coming months."

During the three months ending June 30, Shanta produced 20,544 ounces, up from 17,663 ounces in the previous quarter, while operating costs dropped to US$505 per ounce from US$595. Sales over the quarter amounted to 19,475 ounces at a price of US$1,302 per ounce.

Net debt rose to US$38.1 million from US$37.5 million, while VAT owed to the company is now US$17.9 million.

Shanta has reiterated its 2018 gold production guidance of 82,000-88,000 ounces as well as its AISC of US$680-730 per ounce.

Shanta will shift operations at New Luika completely underground from the end of August as sufficient ore has been stockpiled to enable the open pit fleet to ‘stand down’.

Zurrin said the company had decided to move forward the start of underground production at the Ilunga deposit by more than a year to mid-2019, with final permitting by the end of this year.

At Singida, the company has received encouraging drilling results which increased measured resources. Total measured and indicated resources are now 381,000 ounces at 2.08 g/t gold.

Planning has been completed for ground geophysical work at Singida testing the potential of the 2-kilometre strike between Compatch and Compatch West targets. This is expected to take place at the end of this quarter.

"We are continuing the development program at Singida following the announcement of a new JORC resource estimate, which included a 56% increase in measured resources," Zurrin said.

Phase 1 underground drilling at Bauhinia Creek was completed in early July confirming

the extension of high-grade mineralisation to the east of the Bauhinia Creek and adjacent to the existing underground mine.

Phase 2 drilling at Bauhinia Creek East is planned for later in the year, with 1,000 metres of drilling proposed.

www.shantagold.com