Shanta Gold enters net cash position


East Africa-focused gold producer Shanta Gold’s New Luika gold mine produced 22 216 oz in the second quarter of the year, ended June 30, compared with the 20 167 oz produced in the first quarter of the year.

Based on an average realised gold price of $1 663/oz, Shanta Gold’s adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) increased to $19.4-million, from $15-million in the first quarter.

CEO Eric Zurrin says the annualised Ebitda at the spot gold price is just under $100-million a year from the New Luika mine, with margins having expanded on the back of lower costs and a rising gold price.

Free cash flow increased from $3.9-million in the first quarter to $15.5-million in the second quarter, along with record quarterly deleveraging of $17.2-million, taking Shanta into net cash of $2.1-million for the first time in its producing history.

Net debt was $15.1-million at the end of the second quarter.

Shanta Gold’s cash, and available liquidity was $21.6-million in the second quarter, up from the $15.7-million available in the first quarter, while gross debt decreased by 34% to $13.4-million.

Further, Shanta Gold’s $40-million Investec senior secured loan facilities have been fully repaid.

The miner reports forward sale commitments of 27 000 oz, which have been reduced post period to 23 048 oz – a 42% reduction from the end of 2019, thereby leading to the miner being on track to be unhedged by end of this year.

All-inclusive sustaining costs have been reduced from $883/oz in the first quarter, to $771/oz in the second quarter, while cash operating costs are $512/oz, which is down from $630/oz in the first quarter.

In terms of the acquisition of the West Kenya Project, Shanta says the deal is on track to close in the third quarter, with major conditions now satisfied, including approval from the Competition Authority of Kenya.

“Shanta expects to shortly conclude the acquisition of Barrick’s Kenya assets whereupon Shanta will own three projects with three-million ounces of high-quality gold resources,” says Zurrin.

Source: Mining Weekly


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