The company’s Board Chairman, Anthony Durrant and Chief Executive Officer, Eric Zurrin described 2018 as an excellent year for the company, both operationally and financially, with the result being the highest net profit recorded by the company in four years.
According to Shanta Gold’s 2018 annual results and audited accounts, total mill feed was 639,678 tonnes at an average grade of 4.4 grams per tonne for the production of 81,872 ounzes of gold.
The company’s turnover for the year from sales of gold amounted to U$103.8 million, compared to US$101.5 million made in 2017 which represented an increase of 2.3 percent. The report said the turnover increase was largely due to a proportional increase in ounces sold, with the average selling price realised for the year being slightly lower than that of 2017.
“During the year we developed our third underground mine at New Luika Gold Mine with a safety record of zero lost time injuries. We reduced our net debt to the lowest in Shanta’s producing history and strengthened our project pipeline with the release of the economics for our second project at Singida,” Durrant said in the report.
He said good performance was achieved despite operating in a challenging gold environment and in the absence of value added tax refunds in country while remaining focused on improving the business by reducing costs this year.
“We took steps to extend the mine life at New Luika with exploration at depth adding new high-grade reserves at Bauhinia Creek during the year. We generated new targets at Lambo, Quartzberg and Porcupine South. New targets, if proven economic, could ultimately allow us to develop satellite feed for blending at New Luika,” the Board Chair added.
“We are fortunate to be operating in a region hosting exceptionally high-grade gold deposits providing the opportunity to blend high-grade tonnage with the substantial existing low-grade resources which today sit outside the mine plan,” he noted.
Durrant further noted that Singida’s gold mine will be separated into a new company for funding by third parties at the asset level while remaining optimistic that the project will progress to production in the near future.
“We anticipate another year of steady production in 2019 and continue to critically assess all aspects of the business with a view to removing unnecessary costs, improving efficiencies and capital allocation,” he underlined.
Production in 2019 is forecast to be similar to 2018 at between 80,000 – 84,000 ounces of gold, with the possibility of maintaining those levels in future years at New Luika, Durrant pointed out.
Backing the Board Chair’s observation, Zurrin said production successes of 2018, in which revised guidance of 80,000 ounces was beaten following a record-breaking fourth quarter, was the ability to significantly increase mill throughput which we expect to be sustained into 2019.
“One of the headline achievements in 2018 was the reduction of recurring costs by US$7.2 million per annum. This total exceeded initial targets and was achieved through cuts to overhead costs and contract renegotiations spanning the group’s entire supplier base,” the CEO added.
He said importantly, Shanta’s underground operations were ringfenced from cost reductions to ensure operational performance. Further cost savings of approximately US$1.2 million are expected for the coming year following internalisation of the management of New Luika’s 7.5 megawatts heavy furnace oil power plant at the end of 2018, Zurrin said.
“Ongoing cost reviews continue to identify additional cost savings which will be executed during 2019. The company is undertaking a wide-ranging exploration programme spanning the entire licence portfolio. On-mine exploration remains the highest priority, as the group looks to extend the long-term future of New Luika. The board has taken the decision to double the company’s 2019 exploration budget to approximately US$3.6 million in order to achieve this objective,” the CEO added.