Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – Following an extensive drill programme at its Singida project, in central Tanzania, East Africa-focused gold producer and explorer Shanta Gold has announced a maiden reserve of 1.39-million tons at 5.1 g/t for 230 000 oz of recovered gold.
The ore reserve estimate, which focused on Singida’s Gold Tree and Jem deposits, was based on a 2009 Joint Ore Reserves Committee-compliant mineral resource estimate of 5.18-million tons at 3.3 g/t for 550 000 oz.
CEO Mike Houston said on Wednesday that the reserve, which was based on a gold price of $1 300/oz, supported a mine plan covering what the company believed would be the first phase of this operation – a five-year opencast mine producing 265 000 t of ore with an average grade of 5.1 g/t at 40 000 oz/y.
“These additional ounces will come at a competitive back-of-mine cost with very few overheads, thus pulling Shanta further down the cost curve. It will now be critical that we manage the capital cost carefully but, with the experience gained at New Luika, I am confident we can deliver a competitive project,” he commented.
Average cash costs, inclusive of contingencies and royalties, were calculated at $605/oz.
Houston added that he was “excited” about the longer-term potential of Singida, as five other deposits in the vicinity were being investigated and could provide additional opencast ore.
In addition, drilling results indicated that the Gold Tree and Jem orebodies were open at depth and contained “interesting” high-grade pay-shoots.
“Taken alongside the potential for life-of-mine extension at New Luika, as well as the wider potential of the Lupa goldfields, our Singida project will form a significant part of our long-term growth strategy,” Houston noted.
Studies were currently under way to assess the underground mining potential at both Gold Tree and Jem.
Commenting on the announcement, fund manager Liberum Capital said in a statement that the delivery of a maiden reserve statement for the project was a key step to Shanta developing its next gold mine and a significant progression for Shanta's growth profile.
“Combined with expansion and mine life extension opportunities at New Luika, we envisage an impressive group production compound annual growth rate of 22% until 2017, as the cash cost estimate is attractively low.
“In addition, higher group production will drive already sector-leading all-in sustaining costs even further down the cost curve by spreading central administration costs over increased production volumes,” it stated.
The announcement, Liberum added, was another example of Shanta delivering on its stated targets.
“The Singida project looks attractive with high grades likely to provide solid early cash flows and operational flexibility. We retain our 'buy' recommendation, noting that Shanta is our preferred junior gold play,” it said.