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September 06, 2017
The government in the African country has passed new mining laws and a finance act recently that hasincreased royalty payments on gold exports to 6% from 4% and imposed a 1% clearing tax.
Shanta said the changes will cost it an extra US$3mln annually or US$39 per oz of gold, a sum the new cost savings will offset.
The company operates the New Luika mine in Tanzania, where underground mining has just got underway, and most of the costs will be saved through a reduction in external contractors working at the mine.
Shanta added it had paid US$67mln to the government since the mine was commissioned in 2013 and is owed US$15mln in VAT repayments.
In total, US$150mn has been spent constructing New Luika but spending should fall from now on, allowing the company to repay borrowings over the next two years, Shanta Gold said.
New Luika is on track to produce the bottom end of the 80,-85,000 oz guidance issued previously for the current year, at an all-in sustaining cost of US$800-850 while to 2023. total production should be 514,000oz.
Elsewhere, Shanta said it would evaluate the financing required to develop Singida, another gold asset in Tanzania, before making a decision on what to do next.
Management team changes were also announced with Scott Yelland promoted to chief operating officer, Luke Leslie to interim CFO while Honest Mrema will become general manager of the New Luika mine.
Eric Zurrin, Shanta’s chief executive, said that following the review the business is now well-structured to deliver long term value.
“The new value enhancement and cost saving initiatives will create a stable platform from which the company can prosper and grow sustainably under the new Tanzanian mining legislation.
“Shanta will boast a leaner cost structure, have a focus on increased cash generation, develop greater internal Tanzanian leadership and importantly deliver reduced financial risk.”
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