Shanta Gold confirms IPO plans for Singida project

East Africa-focused gold producer Shanta Gold updated the market on its plans to finance the Singida Gold Mining Project in Tanzania on Friday, reporting that Singida Resources would be proceeding with a targeted $20m minimum equity offering via an initial public offering on the Dar es Salaam Stock Exchange (DSE).

The AIM-traded firm said the IPO was expected to take between six and 12 months to complete, and was the result of “encouraging” feedback from recent investor roadshows by management in Tanzania, Uganda and Kenya;

An IPO prospectus was submitted to the Tanzanian Capital Markets and Securities Authority, and the DSE, with Shanta Gold set to retain at least 51% ownership of Singida, and operate the project.

The proposed IPO proceeds would finance the upfront capital to bring the project into production, and provide additional funds for exploration targeting resource expansion.

On 5 December last year, Shanta Gold announced the Singida Project's economics, reporting that average annual production from open pit mining was expected to be 26,000 ounces for an initial six-year period.

That was expected to increase Shanta Gold's total gold production to more than 100,000 ounces per annum from the first full year of production.

The pre-production capital expenditure requirement would be $16m, with $3m for working capital, while the project’s net present value would be $31m with an internal rate of return of 67%, at an 8% discount rate and using the current gold forward curve.

Life of project cash costs were projected at $794 per ounce.

The board said the project economics are were based on internally prepared management estimates produced by the Singida internal owners team, and had not been independently verified.

It added that there was significant further upside potential through the inclusion of substantial resources currently sitting outside the project economics, also reporting that “most” key infrastructure requirements were in place including water, Tanesco grid power, resettlement and an operating camp.

“As previously communicated, we are focused on bringing Singida into production through an asset-level financing that unlocks value for Shanta Gold shareholders while also allowing the company to retain a controlling interest in this valuable asset,” said Shanta Gold chief executive officer Eric Zurrin.

“I am pleased with the initial feedback from institutional investors across East Africa who are seeking US dollar linked investments in support of industrialisation.”

Additionally, Zurrin said the company was “pleased” to show its continued support to Tanzania, with the board hoping that the IPO would offer Tanzanians a rare investment opportunity within their own mining sector.

“I look forward to providing further updates throughout 2019 as this unique funding opportunity progresses.”