Shanta Gold swings to a profit as cost-cutting starts to pay off

East Africa-focused gold producer Shanta Gold swung to a profit in the first half of its trading year as the group began to reap the rewards of its stringent cost savings initiatives.

Shanta profits for the six months ended 30 June came in at $7.1m, a marked turnaround from the $2.1m loss turned in by the group a year earlier.

EBITDA grew 7% to $23m despite revenues dipping 4.74% to $50.2m.

The AIM-listed firm managed to cut its net debt by 3.5% throughout the half to $38.1m; however, Shanta's cash pile shrank 34.5% to $8.9m.

Despite seeing gold production fall 4.66% year-on-year to 38,207 ounces, Shanta reiterated its full-year guidance of 82,000 to 88,000 ounces of gold.

Shanta achieved roughly $7.2m of recurring cost reductions, improving its cost base by approximately $85 per ounce in less than twelve months and also managed to reduce cash costs 11% to $505 per ounce in the second quarter.

Eric Zurrin, Shanta's chief executive, said, "I'm delighted to report a profit after tax for the period of $7.1m in today's H1 2018 results. In the same period last year, we recorded a loss after tax of $2.1 m, showing the positive impact that our stringent cost focus strategy is having on the company for its shareholders."

As of 0845 BST, Shanta shares had jumped 5.38% to 4.90p.