Update - Tanzanian parliament passes new natural resource laws "enabling renegotiation of mining contracts"


This is all expected. I would parallel what's going on here with what happens when, say, a regulator announces something wrong happened or its unhappy with something. Great uncertainty is created, a lot of people run away as it is uncertainty rather than 'risk' and a period of angst follows that see share price tank and the worst outcome overweighted. 

Tanzania is right to get a better grip on its resource sector and hopefully it does it with transparency and public mindedness rather than cronyism for the new head boys. I do think its the former but only time will tell.

The most concerning thing in this for me is the requirement to bank earning in Tanzania. If this is turns into an absolute rule then its a disaster. However, I remain of the view that Tanzania will not want to self-harm and that the banking rule along with the push against exporting mineral concentrates is a way to ensure they have a better handle on $s produced. They will see that the cash earnings from established mining can way out run the accounting earnings. There is a negotiation to be had on what the right level of tax is...in the end taking it off the top as they have done with the 1% export tariff is simpler and less easily gamed. And I doubt there are many foreign companies running economically marginal operations in Tanzania due to the perceived risk and need to be compensated for it so taking from the top of earnings stack is unlikely to harm current or future investments much (or at all if they provide breaks for prospective investment). Note, Shanta Gold (LON:SHG) can make sustainable free cash flow that is near 25% of revenue in the next few years so not very sensitive to a few percent govt take.

What happens to price from here for Shanta Gold (LON:SHG) ? Well, it may suffer some more as its a micro cap current events just lead to punters totally ignoring. The thing to move Shanta price is results. H1 2017 has last bit of capital investment for new underground mining plus the danger of operational shortfall due to any hitches…

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