In a statement last week, Shanta Gold which is listed at London Stock Exchange’s alternative investment market said the beginning of construction work has also resulted into the updating of the project economics for the Singida Gold Mining Project.
The statement noted that the mine’s reserve-based plan gives post-tax net present value eight percent of U$73 million and an internal rate of return of 59 percent at U$1,900 per ounces (approximate current gold spot price).
The company’s release further added that average annual life of mine gold production of 32,000 ounces at an all in sustaining cost of U$869/oz which increases the company’s production to about 110,000 oz in the first full year of operation.
The project which is completely finance by the company’s own resources said over 90 percent of existing reserves are only 120 metres below the surface at the project site with resources of 9.8 metric tons grading 2.11 gram per ton for 664,000 oz currently sit outside the project economics (but within the mining licences), giving significant upside potential.
Shanta’s CEO, Eric Zurrin said, “The Singida Project has very attractive economics for Shanta with considerable upside through potential conversion of mineral resources currently outside of the reserve-based mine plan. The project will increase group production to over 110,000 oz per year while maintaining our attractive cost base.”
The company which also owns New Luika Gold Mine in Chunya District of Mbeya Region also has advanced a number of financing discussions, including an initial public offer on Dar es Salaam Stock Exchange and local debt financing.
“Singida is hosted in a greenstone deposit lending itself well to upside exploration potential. Future exploration will target the extension of reserves and will be funded by cash flow from production at Singida. Successful future exploration could justify an increase in the size of the plant to increase both throughput and production,” Zurrin noted.
He pointed out that the Singida Gold Mine will have a major positive impact on Ikungi District adding that the company intends to roll out its well-regarded corporate social responsibility program into the surrounding villages which will lead to improvements in livelihoods, water, health and education.
Among early construction activities which started this month include Tanesco grid power connected to site; camp upgrade underway to accommodate 70 people for the initial construction team; and working group in place and discussions to be initiated with TanRoads to upgrade local bridges for the movement of plant and equipment.
Other activities include: Investment in water security advanced with access to wholly-owned boreholes; Tender for sterilization drilling contract in progress; While front end engineering design has also commenced with Shanta’s engineering team continuing to complete detailed designs for elution circuit, water and sewer treatment plants in preparation for procuring the long lead items.