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.

Shanta released a revised mine plan for the project in March this year.
The plan is the culmination of a process that updates the September 2015 base case mine plan (BCMP) to incorporate: 
• additional openpit reserves at Elizabeth Hill, announced in January 2016; 
• additional underground reserves at Ilunga; 
• lower operating costs in the openpit operations; 
• optimised mine plans for Bauhinia Creek and Luika underground, relative to the BCMP; and, 
• reconciliation with depleted reserves as at December 31, 2016. 

The strategy for NLGM is to maximise value and mine life through the inclusion of additional resources and reserves within and around the mining licence. For the purposes of the plan, all reserves incorporated in the plan at this stage are within the existing mining licence areas. 

From 2017, NLGM will be a blend of underground mining of high-grade ores and smaller-scale surface mining of lower-grade resources.

The revised mine plan provides for mining extraction of 3.64-million tonnes for the production of 515 500 contained ounces from January 2017 to 2023, with 71 000 oz (14%) from openpit and 444 500 oz (86%) from underground. The balance of process feed ore will come from stockpiles, gravels and mineralised waste, totaling 11 500 contained ounces. 

Underground mining is from Bauhinia Creek, Luika and Ilunga to depths below surface of 350 m, 315 m and 250 m respectively. Mining methods are predominantly long-hole open stoping, with back fill where warranted. 

Surface mining is at Ilunga, Jamhuri, Shamba and Elizabeth Hill. At this stage, Black Tree Hill deposit is not included in the plan. 

Under the plan, the process plant achieves full capacity utilisation to 2022. It is expected that additional resources from the existing portfolio of opportunities within the mining licence and the company’s surrounding exploration licences will provide further mine life and optionality for NLGM. 

A separate tailings recovery project will produce a further 14 600 oz.

Gold production from 2017 to 2020 will average 85 200 oz/y, compared with 84 000 oz/y in the BCMP, with opportunities to optimise future years with additional resources and reserves as they are defined. 

The revised mine plan estimates a seven-year life-of-mine.

The addition of the Ilunga underground reserve adds significantly to the revised mine plan. The Ilunga underground feasibility study has been completed for the extraction of 660 500 t at a grade of 5.6 g/t for 118 000 oz contained. The Ilunga underground will use long-hole open stoping mining methods and the existing mining fleet acquired for Bauhinia Creek and Luika underground.

Ilunga has a projected mine life of five years and has a yearly production of 21 500 oz.

Jobs to be Created
Not stated.

Net Present Value/Internal Rate of Return
According to the revised mine plan, the project has a net present value (NPV), at an 8% discount rate, of $123-million.

The tailings recovery project has a standalone project net present value, at an 8% discount rate, of $2.8-million and a pretax internal rate of return (IRR) of 39%.

The Ilunga underground project has an NPV, at an 8% discount rate, of $41.9-million, with a pretax IRR of 129%, with a payback of 2.2 years. 

Value
The revised mine plan puts total capital expenditure of the project life at $68-million.

Preproduction capital required for the Ilunga underground project has been estimated at $8.5-million, including contingency that is expected to be funded from cash flow.

Duration
Underground production is scheduled from the second quarter of 2017.

Latest Developments
In June this year, Shanta announced that it had entered into an arm’s length arrangement to acquire all the issued and outstanding common shares of Helio Resource Corporation by way of a statutory plan of arrangement, subject to Helio shareholder and British Columbia Supreme Court approval. 

Shanta will acquire Helio’s Saza-Makongolosi project (SMP), which is adjacent to Shanta’s NLGM.

The SMP openpit has an indicated gold resource of 332 000 oz at 1.8 g/t and an inferred resource of 17 000 oz at 1.6 g/t. Underground resources include an indicated resource of 258 000 oz at 4.9 g/t and an inferred resource of 27 000 oz at 3.8 g/t. 

The acquisition will result in an increase in Shanta’s gold resources from 824 000 oz at 1.9 g/t to 1.46-million ounces at 2.09 g/t. These ounces are not yet incorporated into NLGM’s mine plan. 

These resources are exclusive of NLGM’s current proven and probable Joint Ore Reserve Committee-compliant mine reserves of 515 000 oz at an average grade of 4.4g/t as announced in March this year. 

Shanta intends to incorporate these resources into its future mine plan and explore the potential to expand the NLGM production rate incorporating these additional resources as soon as possible. 

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

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