JOHANNESBURG (miningweekly.com) – Aim-listed Shanta Gold’s New Luika mine, in Tanzania, produced 20 416 oz of gold in the quarter ended March 31, improving the company’s margins and keeping it on track to meet its 2017 guidance.

“Shanta had a promising start to the financial year with more ounces produced, at a greater margin than planned, ensuring the company is on track to meet its 2017 guidance of 80 000 oz to 85 000 oz at an all-in sustaining cost (AISC) of $800/oz to $850/oz,” CEO Toby Bradbury said in a statement this week.

The company achieved quarterly gold sales of 23 252 oz at an average price of $1 249/oz, above the average spot price of $1 219/oz for the period.

Unit cost performance benefited from record gold recoveries of 92% for the quarter. 

The run-of-mine stockpile at the end of the quarter was 67 000 t of ore grading 2.1 g/t which is being blended with the high-grade underground ore.

As of March 31, Shanta had sold forward 25 000 oz to October at an average price of $1 292/oz. 

Cash costs for the first quarter were $553/oz, compared with $486/oz in the fourth quarter of 2016, while AISC were $768/oz, compared with $747/oz in fourth quarter of 2016.

Shanta’s cash balance stood at $11.7-million at the end of the quarter, down from $15-million in the fourth quarter, primarily as a result of an capital expenditure investment and an increase in value-added tax receivables.

The company’s gross debt decreased to $56.2-million, from $57.9-million in the previous quarter, following ongoing repayments to financial institution Investec. Net debt increased to $44.5-million, from $41.1-million in the previous quarter, following the decrease of the company’s cash balance. 

Further, underground production at New Luika remains on track to reach commercial production during the second quarter of this year. The development also remains within budget.

As at the end of the quarter, 2 297 m of underground development had been completed. The Bauhinia Creek orebody access has started on the 915, 900 and 880 levels with the turnout reached on the 865 level.

“ . . . we have started processing underground development ore, with 15 171 t grading 10.6 g/t mined in the quarter,” Bradbury said.

Three of the four raise bore ventilation shafts have also now been completed with the Bauhinia Creek main fan due for commissioning in the second quarter.

However, owing to the move underground, Shanta anticipates second-quarter gold production to be its lowest for 2017, as it moves through the ramp-up process of the underground production. 

Bradbury added that the forthcoming release of a maiden resource for the Nkuluwisi prospect close to New Luika “further underpins shareholder value”. The drilling assay results to inform a maiden resource for the prospect are expected in the second quarter.