28th Feb 2020 11:46
(Alliance News) - Shanta Gold Ltd on Friday posted a full-year revenue rise due to increased gold price, but swung to a full-year loss on rising non-cash costs.
Shanta Gold shares were 17% lower at 9.05 pence each in London on Friday morning.
In 2019, revenue was 8.7% higher at USD112.8 million from USD103.8 million. The east Africa-focused gold producer posted a pretax loss of USD1.2 million, swinging from a USD13.1 million profit in 2018.
Profit, Shanta said, was "heavily impacted by the non-cash loss on forward contracts".
According to the numbers, the company's loss on non-hedge derivatives and other commodity contracts soared to USD9.8 million from USD1.3 million in 2018.
Adjusted earnings before interest, tax, depreciation and amortisation, which does not include the non-cash loss, rose 4.4% in 2019 to USD47.7 million from USD45.7 million.
The average realised gold price was 9.4% higher year-on-year at USD1,377 an ounce from USD1,259.
"The gold price is currently reaching heights not seen for almost seven years which increases the value of the company's second asset, Singida. We are considering a number of financing options to raise the capital required and remain committed to starting construction in 2020," Shanta said, referring to its Singida project in Tanzania.
The company also operates the New Luika gold mine, also in Tanzania.
Annual gold production there came in at 84,506 ounces, nudging ahead of its guidance which forecast output between 80,000 and 84,000 ounces.
Gold sales however, were 1.9% lower in 2019 at 80,926 ounces.
For 2020, Shanta expects production between 80,000 and 85,000 ounces. Shanta has also upped its exploration budget by 65% in 2020 to USD5.0 million.
The company is also fresh from agreeing a deal to buy gold projects in east Africa from Canadian mining giant Barrick Gold Corp.
Shanta has purchased Barrick subsidiary Acacia Exploration Kenya Ltd, whose main asset is the West Kenya project. Acacia Exploration Kenya is part of Acacia Mining, which was on the London Stock Exchange until its takeover by parent Barrick last year.
Shanta is paying USD7 million in cash to Barrick and USD7.5 million in shares, as well as a 2% life-of-mine net smelter return royalty. Barrick will become Shanta's fifth-biggest shareholder, with a 6.4% stake.
By Eric Cunha; [email protected]
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