Name of the Project
New Luika gold mine (NLGM) project.

Location
The project is located in the north-west of the Lupa goldfield, in south-west Tanzania.

Client
Shanta Gold.

Project Description
The New Luika gold mine was commissioned in August 2012 and is expected to produce an average of 84 000 oz/y.
The mine comprises several small to medium-sized high-grade deposits in close proximity to one another. Bauhinia Creek and Luika are the two key gold deposits currently providing high-grade ore. Shanta’s other satellite deposits, where exploration continues, include Jamhuri, Ilunga, Shamba, Blacktree Hill and Elizabeth Hill.

The underground feasibility study completed on the NLGM provides for the extraction of 1.57-million tonnes over six years at a grade of 6.5 g/t, producing 310 000 oz.

The base case mine plan envisages:
– ongoing surface mining and the tailings recovery project, incorporating the underground mining operation;
– underground operations, providing an extension of high-grade ore supply to maintain an average NLGM production of 84 000 oz/y over the next five years, with potential to further optimise the schedule; and
– a separate tailings recovery project producing a further 19 000 oz.

The base case mine plan provides for the extraction of 2.79-million tonnes for the production of 443 000 oz from January 2016 to 2022 – 133 000 oz from the openpit and 310 000 oz from underground.
Probable reserves for surface and underground are estimated at 2.65-million tonnes at 5.9 g/t gold.

Total resources outside the base case amount to 6.64-million tonnes at a grade of 2.41 g/t.

These resources, which can potentially benefit from further exploration, have been prioritised for further evaluation and have the advantage of being located within the current mining licence, enabling quick access to early production.

The underground project, which is fully resourced in terms of employees and equipment, is aimed at bolstering production as New Luika’s openpit operations are gradually mined out by March 2018.

Jobs to be Created
Not stated.

Net Present Value/Internal Rate of Return
The underground feasibility study has estimated a net present value (NPV), at an 8% discount rate, of $72-million, and a pretax internal rate of return (IRR) of 56%, with a three-year payback.

The post-tax NPV for the base case plan from January 2016, at an 8% discount rate and a gold price of $1 200/oz, is estimated at $110.4-million.

The base case tailings project has a projected NPV, at an 8% discount rate, of $5.1-million, and a pretax IRR of 49%.

Value
Preproduction capital expenditure is estimated at $38.4-million, comprising $8.2-million for surface and underground fixed infrastructure, $14.5-million for mobile equipment, $8.2-million for lateral and vertical development and $7.5-million for the power plant upgrade. The underground mining equipment includes a 5% contingency within an overall contingency for all capital purchased items of 8%.

Duration
The decline development at the NLGM started in July 2016 after Shanta Gold secured all the required approvals for the Tanzania mine to progress from a surface operation to a high-grade underground mining operation.
Underground production is scheduled from the second quarter of 2017.

Latest Developments
Shanta expects to release an updated mine plan for the gold mine in the first quarter of 2017.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Shanta’s current production, operating and capital costs remain on target, with a full update expected to be released alongside the company’s results for the second quarter of 2016.

Contact Details for Project Information
Shanta Gold, tel +255 22 2601 829, fax +255 22 2112 341 or email Info@shantagold.com.