After a robust operational performance, East Africa-focused gold producer, developer and explorer Shanta Gold on Tuesday reported cash generation of $11.1-million and a reduction in net debt – from $44-million to $38-million – for the quarter ended September 30.
The company expected to deliver at the upper end of its production guidance of between 82 000 oz and 87 000 oz for the year, though a slight reduction in gold production was expected.
During the quarter under review, mining was completed at the Bauhinia Creek Pit following the completion of surface mining at Luika, in Tanzania, in June.
A new pit was established at the Ilunga satellite deposit, where production started in July. Ilunga will provide an average of 20 000 t/m of ore for the next ten months. Additional material will be sourced from the established pit at Jamhuri, as required.
Meanwhile, the underground development at Bauhinia Creek continues on budget and on schedule, with production of high-grade ore due in the second quarter of 2017.
The surface infrastructure is largely in place and the focus is on development of the decline.
Raise boring of the first pair of ventilation shafts for the Bauhinia Creek underground mine will begin in the fourth quarter of the year, for which the surface platforms have already been established.
Shanta, which considers the Ilunga deposit a high-priority opportunity, is currently in the process of mine design to create a reserve that is expected to significantly extend the life of New Luika with its high-grade resources.
Further work will continue at Luika within the mining licence and in the surrounding prospecting licences held by the company.
FINANCIAL RESULTS
Shanta reported a strong unit cost performance in the third quarter, predominantly as a result of continued cost efficiencies. Cash cost per ounce amounted to $387/oz and all-in sustaining costs amounted to $621/oz.
In the first nine months of 2016, Shanta benefited from an accelerated mining programme in a below average strip-ratio environment, which reduced the fixed cost component of mining and enabled the company to achieve beneficial cash costs.
With the completion of Luika Pit in June and Bauhinia Creek Pit in September, together with the revised mining contract, Shanta expects cash costs to remain low despite a lower-ounce production profile for the remainder of the year.
Consequently, cost guidance for the year has been revised down to between $690/oz and $740/oz.