15th Jul 2016 07:44
LONDON (Alliance News) - Shanta Gold Ltd on Friday said it plans to initiate a pilot production programme at the Singida gold project in Tanzania that will start early next year, whilst the miner progresses other work streams at the asset.
Shanta will invest around USD4.0 million from its existing cashflow to set-up the pilot production programme, which will last for "at least two years", with production to be sourced from the Gold Tree 1 prospect.
Shanta is expecting the operation to be cashflow positive and produce 800 ounces per month, equal to an annualised rate of 9,600 ounces, suggesting the pilot programme will deliver at least 19,200 ounces over the two-year plan.
Grades are expected to be high, with the initial targets near the surface estimated to be around 6.0 grammes of gold per tonne of ore.
To put that into some form of perspective, Shanta's flagship asset that is already producing in Tanzania, New Luika, produced 81,873 ounces of gold in 2015 and delivered an average grade of 4.73 grammes of gold per tonne.
Shanta on Friday said New Luika is continuing to deliver "stable production and robust cashflows" and said a second quarter update will be published next Tuesday.
Although production from Singida will be on a small-scale during the pilot programme, the asset, which is thought to be considerably larger than current estimates, is already large in volume with nine ore bodies containing a combined resource of around 858,000 ounces.
Leading the development is Philbert Rweyemamu, the former general manager of the Buzwagi and Tulawaka gold mines owned by London-listed mining giant Acacia Mining PLC. He also boasts previous roles at diamond miner and marketer De Beers, the majority of which is owned by Anglo American PLC.
In light of the new development, Shanta is reviewing the environmental and social impact assessment for Singida and starting work to update the resource at the project and the wider surrounding area.
Importantly, Singida already has a mining licence in place that does not expire until 2022, which can then be renewed.
In the second half of this year, the miner plans to conduct 5,000 metres of reverse circulation drilling within the "project area" of Singida, drilling from the surface to around 100.0 metres below surface.
Exploration on the asset has previously been constrained by Shanta's budget, and the miner believes it has not been drilled to its full potential. The company thinks there is potential for the scale of the Singida resource to extend considerably on strike and at depth.
"Following an extensive consultation programme, the company is now able to progress development at Singida with the full support and enthusiasm from both the local communities and authorities. A new mine in this region of Tanzania has the potential to make a positive impact on the lives of many and Shanta intends to ensure that the economic benefit is extended beyond that of the mine itself," said Chief Executive Toby Bradbury.
Shanta shares were up 5.1% to 7.62 pence per share on Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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