Low-cost Tanzanian gold producer Shanta Gold has significant growth potential across its assets and expects to release an updated mine plan for its New Luika gold mine in the first quarter of 2017.

“The company is building the foundations to become a midtier African gold producer. Its strategy is to generate shareholder value by developing this low-cost, high-grade gold mine as the platform for growth,” says Shanta CEO Toby Bradbury.

The New Luika gold mine, in the north-west of the Lupa goldfield, in south-west Tanzania, is Shanta’s flagship project.

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.

The New Luika gold mine was commissioned in August 2012 and is expected to produce an average of 84 000 oz/y at an average all-in sustaining cost (AISC) of $695/oz from 2016 to 2020.

In the 2015 financial year, New Luika produced 82 000 oz at an average AISC of $834/oz.

Shanta’s other satellite deposits, where exploration continues, include Jamhuri, Ilunga, Shamba, Blacktree Hill and Elizabeth Hill. Ongoing exploration results from these deposits continue to be encouraging with the recent update from Ilunga on September 7, says Bradbury.

“This resource update proved the concept for the exploration programme’s ability to add to the mine life of the New Luika gold mine,” he says, outlining that this will become evident in the project’s updated mine plan, which will also include the Elizabeth Hill reserves.

This is the first of four opportunities that offer significant immediate growth potential to the company.

The second opportunity that offers a catalyst for growth is the prospect for high-grade extensions at depth at Bauhinia Creek, Luika and Ilunga, where the resources are all open at depth. As these deposits are located within Shanta’s mining licence at the New Luika gold mine, the company foresees that these resources can be developed over a short timeframe, with all permits and approvals already in place.

The third opportunity for growth within Shanta’s portfolio is its exploration tenements surrounding the New Luika gold mine in the Lupa goldfield, covering 1 300 km2. The company has an exploration programme in place for the discovery of new resources, which are targeted initially to further increase the mine life of New Luika.

Lastly, Bradbury notes that the company owns the majority of the advanced-stage Singida gold project, which has a mining licence in place and is located in northern-central Tanzania.

More than 80 000 m have been drilled at Singida to date. In 2011, a detailed feasibility study was undertaken, which outlined that Singida consists of nine orebodies – Gold Tree 1, 2 and 3, Jem, Vivian, Corn Patch, Corn Patch West, Gustav and Kaiser Chief. These orebodies have a combined resource of 858 000 oz at a cutoff grade of 1 g/t.

Shanta states that continued operational success at the New Luika gold mine has enabled the company to advance Singida, and an exploration programme and pilot plant project are under way.

“The pilot-scale production is due to start in the first quarter of 2017 on the Gold Tree 1 prospect, building up to a milling rate of 10 t/h. Based on a grade of 4 g/t and a recovery of 40% gravity gold, the project should pay back within two years. Further testwork is under way, with the view that the potential could be even better than this,” says Bradbury.

Local Input

All of Shanta’s projects are in underdeveloped areas of Tanzania, with economic activity and skills availability a challenge. However, the company says it has successfully employed many locals, with 93% of Shanta’s workforce being Tanzanian. About 40% live in local villages surrounding the company’s mining sites.

“Safety performance is a key measure of Shanta’s duty of care. The ability to mine efficiently and safely demonstrates the company’s approach to productivity. Shanta’s low injury and absentee rates are generally linked to positive trends in staff morale, overall ownership in the company’s success and the care that our employees have for one another,” avers Bradbury, adding that Shanta wants every employee to return home safely and unharmed each day.

The company places great emphasis on skills development and is encouraging alternative economic development, usually involving a strong agriculture component.

It says it tries to act as a catalyst to attract other agencies to come into an area to support the development of the region, with Shanta contributing to local economies through wages, salaries and service levies.

“Shanta also contributes 0.5% of its yearly revenue to the capital development of local facilities to assist in the provision of . . . water security, the construction of school classrooms, laboratories and medical facilities [among others],” Bradbury concludes.