20th Apr 2015 07:58
LONDON (Alliance News) - Shanta Gold Ltd shares were trading lower on Monday after the company downgraded its production guidance for the year after a fall in production in the first quarter, even as it turned to profit in 2014 on the back of higher gold production and sales.
Shanta said its production in the first quarter to the end of March was 13,516 ounces of gold, down from 19,114 ounces a year earlier. Ore production was impacted by the work carried out on the Bauhinia Creek access ramp but also by reduced access from unexpected geotechnical issues at the Luika Pit, which resulted in lower volumes and poorer quality materials being processed.
Shanta sold 13,551 ounces in the quarter at USD1,252 per ounce. The company's cash cost was USD1,143 per ounce in the quarter, up from USD779 a year earlier, while its all-in sustaining cost was USD1,451, up from USD979 per ounce. The costs were hit by lower grades and lower throughput in the quarter.
As a result of the problems faced in the quarter at Bauhinia and Luika, the company's production was 8,500 ounces lower than planned, leading to cut its full-year production guidance to 72,000-77,000 ounces, at an all in sustaining cost of USD850 to USD900 an ounce, down from 82,000-85,000 ounces previously.
The production downgrade for 2015 came as the group said its turned to profit in 2014, boosted by higher gold production. The company posted a pretax profit of USD16.6 million for the year, compared to a USD4.4 million loss a year earlier.
Revenue came in at USD115 million, up 31% year-on-year on the back of a rise in gold production to 84,028 ounces, a 31% rise. The company sold 87,758 ounce of gold in the year at an average realised price of USD1,289 per ounce, down 8.5% year-on-year due to the fall in the gold price.
"Despite the challenging gold market conditions during 2014, the company consolidated the successes achieved in 2013 with above forecast production and a strong cash generation which enabled Shanta to record a profitable year, reduce its net debt position by US$9 million and fund a critical capital expenditure program whilst maintaining a positive cash position at year end," said Shanta Chairman Tony Durrant.
"While first quarter 2015 production was below forecast, management has taken the necessary steps to address the operational and technical issues and we remain confident that it is a temporary setback resulting primarily from the on-going Bauhinia Creek pushback, a development that is in the longer term interests of the company," Durrant added.
Shanta shares were down 8.1% to 7.925 pence in early trade, one of the worst performers in the AIM All-Share.
By Sam Unsted; [email protected]; @SamUAtAlliance
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