Shanta Gold is a Guernsey-based gold mining and exploration company which operates across several sites in Tanzania through its subsidiary Shanta Mining Company Limited (SMCL); one of the most mineral-rich countries on the African continent.
Off the back of £73.82 million revenues, the company is seeking to expand its gold production output through its existing and developing mines.
While Tanzania has some of the most impressive gold reserves on the continent, these remain largely undeveloped; it has been the mission of Shanta to develop these assets and share the bounty with the communities it works in.
New Luika Gold Mine
What makes the New Luika Mine increasingly useful to Shanta is its position to become a potential hub for all of its mining activities in the region; the facility consists of a conventional three stage crushing plant, along with two parallel mills. It has extensive potential for further development, as it adjoins the 1,300 square kilometres covered under license by Shield Resources, which it fully owns.
Currently, the company’s gold production is concentrated at this mine (which its owns through a 100 percent stake) spanning 16 square kilometres covered by three mining licenses and a single prospecting license which covers some 49 square kilometres. In order to enable access to high grade open pit ore reserves, and ensure future flexibility, a pushback has been planned at the Bauhinia Creek site which is estimated to be completed by the end of 2015.
Following a recent resource assessment, it was established that this mine contained a total in-situ resource of 1.48 million ounces. The mine has shown record gold production of 84,028 ounces driven by seven consecutive quarters of increased production ending Q3 of 2014. Further drilling is scheduled this year which will decrease the risk profile of the mine extension associated with the mining work.
In a statement, the company said: “The update for the open pit reserves reflects the redesign of the open pits with a markedly reduced strip ratio for a proportionally much smaller reduction in reserves. We look forward to announcing the underground feasibility study later this quarter. This is a win-win for New Luika as the surface mine benefits from a substantial reduction in operating costs while a potential underground operation gets additional high grade resource.”
SMCL’s holdings at its Singida site are substantial to say the least; since 2011 the company has been conducting its definitive engineering study (which is undergoing an update scheduled to finish this year), which revealed up to 450,000 ounces of gold. Resettlement negotiations are currently underway (in line with the company’s strict CSR guidelines) which will enable construction to go ahead which will eventually see a mine come into production with an expected lifespan of 10 years.
The future potential of the mine is covered by three prospecting licences which together span approximately 92 square kilometres and three mining licenses which enclose a total area of 30 square kilometres. One licence is wholly owned by SMCL, while GL Jossue and JB Joel Limited hold a 10 percent minority interest in two of the mining licences; Shanta fully owns all three of the prospecting licenses, giving it full direction and control in this regard.
Shanta is also in the very early stages of exploring gold deposits at its site in the Ruvuma Region of southern Tanzania using three prospecting licenses covering an area of roughly 65 square kilometres.
Following airborne magnetic and radiometric surveying in 2008, it was revealed that the site at Songea displayed uranium anomalism, which was later confirmed in 2009 using scintillometry surveys which further established the uranium potential in the area. Alongside these findings, the area also contains tourmaline, sapphire, topaz, and garnet (rhodolite) as well as gem quality cordierite, although whether Shanta is seeking to develop these assets remains to be seen.
Poised for Growth
Despite having projects in differing stages of completion, Shanta is more than willing to invest in capitalising its operations. In January 2015 it carried out some additional infill drilling (totalling 2,676 metres) across nine drill holes which has increased the resource at both Bauhinia Creek and Luika and further improves confidence in the potential for underground mining at both deposits.
Last month, the company completed formal documentation for loan facilities with Investec Bank, following receipt of regulatory approval from the Bank of Tanzania. The loan facilities total $40 million, of which $20 million has been used to refinance an existing bank loan from FBN Bank while the rest of the balance will be used as during the implementation of the New Luika Gold Mine Life of Mine Extension Project.
The finalisation of the loan will enable the company to decrease its cost of funding and will also provide greater financial flexibility for the entirety of SMCL’s projects across the country. A statement from the company said: “We are delighted to have received regulatory approval for these new and competitive loan facilities with Investec. Together with our positive operating cash flow, the loan will put the company in a strong position to pursue upside potential through expansion and exploration opportunities.”
Shanta Gold is listed on London’s Alternative Investment Market (AIM) which belies that the company is not only in a position to receive funding on the world’s most successful growth market, but is also subject to world-class requirements and standards. The economy of Tanzania is heavily reliant on agriculture as a source of income and although mining only currently accounts for 3 percent of its GDP, SMCL’s current exploration efforts are set to make a significant contribution to the country’s economic diversification.
The company has an exemplary CSR programme which covers everything from how it manages and develops its employees, to the ways in which it can reduce its impact on the environment and the communities that its mining operations come into contact with.
The company has constructed classrooms and medical facilities and has provided access to water through establishing and developing a range of local and national partnerships; it has even funded the sustainable, small-scale business initiatives. SMCL’s website captures the pride it has in its impact on the communities it operates in. The company said: “Employment of over 300 hundred local residents has also improved the disposable income in the area and is also allowing self-development within the family unit.”
Roughly 90 percent of the company’s employees are Tanzanian nationals, which sets a clear precedent in an industry that receives criticism for the over-use of expat workers.
Shanta has stringent health and safety requirements in its mines: “Health and safety is an integral pillar of our key performance indicators used to evaluate the performance of all employees on a monthly basis. Employees are recognised for their safety awareness and performance each month as a way to encourage safe practices.” This method of integrating health and safety with employee performance not only ensures that each team member is aware of its importance, but it also enables exemplary practices to be shared and celebrated across the company.
Backing up its strong framework on employee safety is a dedicated health centre for employees, manned by a fully trained doctor; the company even has its own ambulance and aircraft on site at the New Luika Gold Mine in order to ensure the fastest possible response to any incident.
The company also has a range of initiatives in place to make its practices greener and more efficient, which is realised through its environmental management program. Reforestation has made up the bulk of its work so far, but the company is moving towards something greater: self-sufficiency.
Although still in a relatively early stage, the company already recycles and composts much of its waste generated through food consumption and is set to build on this positive momentum.
Companies like Shanta are proving that profitable gold mining and exploration can be achieved while paying sincere attention to the needs of local people and the environment. Through its well-financed operations at the New Luika Mine, it has developed its own field-tested framework for successful future operations in its other developing projects.