6th May 2016 11:40
LONDON (Alliance News) - Shanta Gold Ltd on Friday said it raised about USD10.5 million in a discounted share placing, higher than anticipated, as it swung to a loss in 2015, due to reduced gold sales and a lower gold price.
The company said it raised USD10.5 million in its conditional share placing, having said earlier in the day that it expected to raise USD10.0 million. About 111.4 million shares were placed at 6.5 pence per share, in an accelerated bookbuild undertaken by Peel Hunt LLP, which acted as the sole bookrunner. Shares in Shanta Gold were down 11% at 6.67p on Friday afternoon.
The company said the funds will be used to executive the Base Case Mine Plan, as well as undertake the underground development of its New Luika Gold Mine and to progress satellite deposit exploration.
The placing is conditional, among other things, on the passing of a written resolution of the convertible loan note holders to amend the terms of the convertible loan notes.
Shanta Gold added it has reached a conditional agreement with the holders of USD25.0 million senior unsecured subordinated convertible loan notes for its subsidiary to purchase USD10.0 million of the notes and to extend the term of the remaining noted by two years to April 2019. These loan notes come from a GBP40.0 million fundraising in April 2012.
The company also noted it has agreed a USD5.3 million silver streaming agreement with investment company Silverback Ltd. Silverback will also pay the Shanta Gold an ongoing payment of 10% of the value of silver sold at the prevailing silver price at the time of deliveries which will be made annually.
Shanta Gold said the restructuring of the loan notes, the silver streaming agreement and the placing will strengthen its financial position and will provide "financial headroom" for the continued exploration of satellite deposits.
Shanta Gold said its revenue for 2015 was USD95.7 million, compared with USD114.9 million, after gold sales fell to 80,622 ounces, down from 87,758 ounces, and the average price for gold fell to USD1,163 per ounce compared to USD1,289 per ounce a year earlier.
However, cost of sales grew to USD96.4 million from USD80.1 million, including an amortisation charge of USD21.0 million, which pushed the company into loss. Shanta Gold reported a pretax loss of USD18.1 million in 2015, versus a profit of USD16.6 million a year earlier.
Shanta Gold said it has reworked mine plans for the Bauhinia Creek and Luika Pits sites and, as such, sees a reduction of costs in the 2016.
The company expects production to be at the higher end of 2016 annual production guidance of 82,000 to 87,000 ounces, and, as such, it is currently updates its mine plan for the year ahead.
"Shanta has also enjoyed a very pleasing start to the 2016 financial year which provides another building block to the foundation of delivering a sustainable, strongly cash generative business with real scope to extend the New Luika mine life," said Chief Executive Toby Bradbury.
By Hannah Boland; [email protected]; @Hannaheboland
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