Updates Tanzanian Gold Project Economics
East Africa-focused gold producer Shanta Gold (AIM: SHG) has begun construction work and unveiled updated Project Economics for the Singida Gold Mining Project in central Tanzania.
CEO, Eric Zurrin, said early Work Construction Activities include
- Tanesco grid power connected to site;
- Camp upgrade underway to accommodate 70 people for the initial construction team;
- Working group in place and discussions to be initiated with Tanroads to upgrade local bridges for the movement of plant and equipment;
- Investment in water security advanced with access to wholly-owned boreholes;
- Tender for sterilisation drilling contract in progress;
- Tender for TSF facility design contract in progress;
- Front end engineering design (“FEED”) commenced in early Q3 2020; vendors selected and work is underway; and,
- Concurrent with onsite activities, Shanta’s engineering team continues to complete detailed designs for Elution Circuit, Water and Sewer Treatment Plants in preparation for procuring these long lead items.
Mr Zurrin said Project Economic Highlights include:
Using a Life of Mine (“LOM”) gold price of US$1,700 /oz:
- LOM free cash flow of US$94 m;
- Post-tax NPV8% of US$56 m, an increase of US$25 m since the previous published estimate of US$31 m (December 2018), which was prior to the reserve-based mine plan and revised capital costs;
- Unlevered IRR of 49% and return on investment multiple of 2.5x;
- Project payback period of 40 months; and,
- Average annual EBITDA of US$27 m over the LOM.
Using a LOM gold price of US$1,900 /oz, these financial metrics improve to:
- LOM free cash flow of US$119 m;
- Post-tax NPV8% of US$73 m, an increase of US$42 m since the previous published estimate;
- Unlevered IRR of 59% and return on investment multiple of 3.2x;
- Project payback period of 37 months; and,
- Average annual EBITDA of US$33 m over the LOM.
“The Singida project has very attractive economics for Shanta with considerable upside through potential conversion of mineral resources currently outside of the reserve-based mine plan. The project will increase Group production to over 110,000 oz per year while maintaining our attractive cost base.” Mr Zurrin said.
“Singida is hosted in a greenstone deposit lending itself well to upside exploration potential. Future exploration will target the extension of reserves and will be funded by cash flow from production at Singida. Successful future exploration could justify an increase in the size of the plant to increase both throughput and production.
“Singida will have a major positive impact on the Ikungi region. Shanta intends to roll out its well-regarded CSR program into the surrounding villages which will lead to improvements in livelihoods, water, health and education.”
