JOHANNESBURG (miningweekly.com) – East Africa-focused gold producer Shanta Gold on Monday announced its first operating profit of $11.1-million for the six months ended June 30.

The company, which started commercial production in 2013 increased its gold production 10% year-on-year to 42 194 oz for the six months.

It also posted an after-tax profit of $4.1-million, up from a loss of $1.43-million during the prior corresponding period.

This translated into earnings a share of $0.88.

During the period under review, the company generated $58.3-million in revenue, up from $14.67-million during the prior corresponding period, while recording earnings before interest, taxes, depreciation and amortisation of $15.5-million.

Shanta said a total of 284 685 t of ore was milled in the period under review, an increase of 23% on the prior corresponding period, with the higher mill throughput enabling the processing of lower-grade ore, which resulted in the increase in gold production.

Gold was produced at a cash cost and all-in sustaining cost (AISC) of $759/oz and $965/oz respectively, with 44 459 oz of gold having been sold during the period, at an average price of $1 302/oz.

"Results for the half year are pleasing, not only from the perspective of a positive production and cost performance, but also [given] that the company is generating a healthy operating cash flow,” Shanta CEO Mike Houston said.

He also pointed out that Shanta’s New Luika life-of-mine extension and expansion project, in Tanzania, was progressing well with the initial results from the recent drilling programme on and off-mine having been encouraging.

The results of this project would be announced during the fourth quarter of the year, to incorporate a resource upgrade.

Shanta further said that, while the gold price was forecast to remain volatile for the remainder of 2014, the company had a prudent hedging strategy in place covering 50% of the forecast production for the remainder of the year at $1 319/oz.

Meanwhile, the company indicated that, with its plant upgrade expected to be completed by end of September 2014, it maintained its 80 000 oz to 83 000 oz production guidance with AISC guidance of $900/oz to $1 000/oz for 2014.