Shanta 'disappointed' in first half gold production, sales

East Africa-focussed gold producer Shanta Gold reported revenue of $57.8m in its first half on Friday, falling from $73m year-on-year, while EBITDA narrowed to $17.4m from $27.5m.

The AIM-traded firm said its profit before tax totalled $8.6m for the six months ended 30 June, narrowing from $15.3m a year earlier, while profit after tax rose to $3.1m from $1m.

It paid its maiden final dividend of 0.1p per share in April, and proposed an interim dividend of 0.1p per share, payable in October.

Operating cash flow before movement in working capital totalled $16.6m, down from $29.8m year-on-year, while group-wide exploration spend rose to $4.6m from $1.4m.

Capital expenditure in the period grew to $11.5m from $7.4m, which included Singida capital development spend of $3.8m.

Net cash at period end on 30 June totalled $24.2m, compared to $37.3m at the end of the 2020 financial year, while gross debt narrowed to $0.8m from $11.4m over the same period.

VAT receivable to the company was $27.4m at the end of the period, compared to $27.6m on 31 December.

Of that, it said $4.2m was offset against its 2020 second half corporation tax liability, with a $2.1m cash VAT refund received since the period ended.

All-in sustaining costs were $1,338 per ounce, including $177 per ounce in relation to development costs, which was in line with its reiterated annual guidance of $1,325 to $1,375 per ounce.

Shanta said it had engaged an external consultant to assist with the preparation of its 2021 sustainability report, which was expected to be published later in the year.

“Shanta's exploration success during the first half has generated new high-grade resources at Luika and BC East Area 1,” said chief executive officer Eric Zurrin.

“West Kenya is also proving to be very promising with phase one drilling now complete and highly encouraging assay results including one of our highest-grade intersections at four metres at 706 grams per tonne.

“We continue to be excited by the prospects of West Kenya and we look forward to announcing a resource update in September.”

Zurrin said that, while the company was “disappointed” that its first half gold production and sales were lower than last year, its “strong fundamentals” of net cash, low debt and consistent operating cash flow attested to its “robust” financial health.

“We are also pleased to confirm that we have received $4.2m in VAT offsets during the first half, and a further $2.1m VAT cash refund post-period, as we work with the Tanzanian government to clear the outstanding balance.

“Our new five-year plan outlines our strategy to transform the business into a more-than-110,000 ounces gold producer by 2023.

“Our forecast increase in reserves and resources demonstrates the huge potential in the portfolio, and our extension of the reserve-based mine life at New Luika and Singida underpins our confidence in the long-term sustainability of both assets.”

At 1216 BST, shares in Shanta Gold were down 2.19% at 12.72p.