REG - Shanta Gold Limited - Final Results
10/05/2022 07:00
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RNS Number : 8583K Shanta Gold Limited 10 May 2022
10 May 2022
Shanta Gold Limited
("Shanta Gold", "Shanta", the "Group" or the "Company")
Full Year Results for the year ended 31 December 2021 and
Posting of Annual Report and Notice of AGM
Shanta Gold (AIM: SHG), the East Africa-focused gold producer, developer and
explorer announces its production and operational results for the year ended
31 December 2021 ("FY2021" or the "Year") for its East African assets,
including New Luika Gold Mine ("NLGM" or "New Luika") and Singida Project
("Singida") in Tanzania and West Kenya Project ("West Kenya") in Kenya. The
Group has also today published its Annual Report for the year ended 31
December 2021 and posted its Notice of Annual General Meeting to shareholders,
both of which are available on the Company's website at www.shantagold.com.
Eric Zurrin, CEO, commented:
"Despite the initial challenges we faced as a company during 2021, I am
pleased to report that Shanta ended the year in a strong position, with
reporting in line with revised guidance and operations across all three assets
positively poised for the coming year. Our exceptional safety record and
stable financial performance have once again provided a platform from which
the Company is now able to grow substantially, with Shanta on a clear path to
becoming a +100,000oz producer by early 2023.
Following several very positive drilling results during the year, we have
updated the mine life at New Luika to 2026, and the encouraging start we have
made in the new financial year with the start of high-grade mining at the
Bauhinia Creek Crown Pillar means our 2022 guidance is now significantly
de-risked.
Elsewhere, Singida remains on course to come into production during early 2023
on budget and on schedule, bolstering our output and diversifying our
portfolio in East Africa beyond New Luika. At the same time, the highly
exciting high-grade West Kenya Project has seen some phenomenal high-grade
drilling results during the year, and we were delighted to announce a 31%
increase in the Mineral Resource Estimate at West Kenya to 1.55 Moz just after
the year end.
This year has also seen the Company release its inaugural Sustainability
Report. Our dedication as a company to operating and collaborating in a
responsible manner is central to our culture and corporate purpose, and we
will be looking to proactively build on this disclosure in 2022 and beyond.
I would like to thank all of the Shanta employees for their hard work
throughout this year. We believe that the future is very bright for the
Company, and that has been demonstrated in some of our recent announcements,
most notably the Q1 production update. We look forward to updating
shareholders on further progress in due course."
2021 Highlights
Financial
· Revenue of US$103.6 million ("m") (2020: US$147.4 m);
· Gross profit of US$26.0 m (2020: US$56.7 m);
· EBITDA(1) of US$19.0 m (2020: EBITDA(1) of US$63.9 m);
· All gold sales unhedged and completed at spot price, with average
selling price of US$1,801 /oz during 2021 (2020: US$1,495 /oz);
· Total VAT refunds of US$7.2 million;
· Gross debt reduced to US$2.4 m, following repayment of the US$10
million convertible loan note in April 2021;
· Adjusted Operating Cash costs of US$1,081 /oz and an AISC of US$1,439
/oz; in line with revised guidance; and
· Maiden dividend paid in April 2021 and interim dividend paid in
October 2021, totalling approximately US$2.8 million during 2021.
Operational
· Exceptional safety record with TRIFR of 0.67 and zero LTIs in 2021
(2020: 0.97 and zero LTIs);
· Record annual throughput of 834,607 tonnes ("t") milled, which was
approximately 7% greater than budget, following installation of Mill #3 in H1
2021;
· Average recoveries of 89.7 per cent achieved (2020: 89.7 per cent);
· Total gold production of 55,280 ounces ("oz"), in line with revised
guidance;
· West Kenya continued to deliver encouraging assay results announced
during the with an initial conversion of >100% of Inferred Resources to
Indicated Resources of 117,600 oz grading 7.04 g/t;
· Singida's construction remains on track for first production in Q1
2023, adding a second revenue stream across the portfolio and further
strengthening our diversified portfolio of assets in East Africa;
· Extension of current reserve life at NLGM to the end of 2026
following successful exploration drilling programmes carried out throughout
the year with new discoveries at the Porcupine South deposit adding further
life to NLGM once incorporated into the mine plan in 2022; and
· Tanzanian and Kenyan nationals represent over 99% of the Company-wide
workforce.
Sustainability
· Completed strategic review of sustainability strategy with our
inaugural sustainability report published in H1 2022;
· Completion of the Mbangala Luika Dam water project providing the more
than 7,600 residents of Mbangala village with year-round access to clean
water;
· 3 classrooms and a toilet block constructed at the Kalanda Primary
School located in the nearby Mbangala village; and,
· 2,000 farmers, up from approximately 150 farmers in 2018, have
enrolled in Shanta's Mining Agriculture Improvement Program ("SMAP") which
provides advice, training, and farming materials to farmers in the local
surrounding Mbangala and Maleza villages.
2022 Guidance
· Annual production guidance of 68,000 - 76,000 oz at AISC(2) of
US$1,050 - 1,250 /oz in line with the World Gold Council ("WGC") definition;
· 2022 gold production is weighted approximately 65% towards H2 2022
reflecting mining of the high-grade Bauhinia Creek crown pillar which began in
April 2022. The crown pillar consists of approximately 83,000 tonnes grading
8.4 g/t containing around 22,500 ounces.
Note:
1. EBITDA is earnings before interest, tax, depreciation, and amortisation
which has been derived as operating profit exclusive of depreciation/depletion
of tangible assets, amortisation of intangible assets and one-off exceptional
items.
2. AISC figures published include development costs, in line with the WGC
definition
Board changes
Robin Fryer, who has been a Non-Executive Director and Chairman of the Board's
Audit Committee for seven years, retired from the Board in 2021. Ms Michelle
Jenkins was appointed as his replacement in the year. Ms Jenkins is a
Chartered Accountant (South Africa) and an exploration geologist with an
Honours degree in Geology from the University of Witwatersrand, South Africa.
Ms Jenkins has 25 years' extensive experience across Africa including
currently as the Executive for Finance and Administration (South Africa) for
Orion Minerals Ltd and as a Non-Executive Director of Kumba Iron Ore Limited.
Annual General Meeting ("AGM")
The AGM of the shareholders of the Company will be held at 11 New Street, St
Peter Port, Guernsey, GY1 3EG on 15 June 2022 at 12:00pm.
Enquiries:
Shanta Gold Limited
Eric Zurrin (CEO) +44 (0) 14 8173 2153
Luke Leslie (CFO)
Nominated Adviser and Joint Broker
Liberum Capital Limited
Scott Mathieson / Ed Thomas / Nikhil Varghese +44 (0) 20 3100 2000
Joint Broker
Tamesis Partners LLP
Charlie Bendon / Richard Greenfield +44 (0) 20 3882 2868
Public Relations
FTI Consulting
Sara Powell / Nick Hennis +44 (0) 20 727 1000
About Shanta Gold
Shanta Gold is an East Africa-focused responsible gold producer, developer,
and explorer. The company has an established operational track record, with
defined ore resources on the New Luika and Singida projects in Tanzania, with
reserves of 645 koz grading 3.0 g/t, and exploration licences covering
approximately 1,100 km2 in the country. Alongside New Luika and Singida,
Shanta also owns the high-grade West Kenya Project in Kenya and licences with
resources of 1.6 million ounces including 378 koz in the Indicated category
grading 11.70 g/t. With a strong balance sheet, a growing diversified
portfolio and a maiden dividend paid in 2021, Shanta offers a resilient
investment opportunity for the near and long-term. Shanta is quoted on
London's AIM market (AIM: SHG) and has approximately 1,048 million shares in
issue.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit)
Regulations 2019.
Chairman's statement
Whilst 2021 posed some challenges to Shanta, the Group did well to finish the
year in line with our revised production guidance. The robust fundamentals
that underpin the Group's operations ensured that we ended the year with a
strong balance sheet, an outstanding safety record for the fourth year in a
row, and having completed the largest exploration programme ever conducted in
the Group's history.
I am also pleased to announce that our first standalone annual Sustainability
Report for 2021 was recently published and reports on the sustainability
issues that are most important to both our stakeholders and the wider business
community. This year was important for the Group in terms of our
Environmental, Social and Governance ("ESG") goals, with Shanta achieving key
milestones including benchmarking our current position against peers, starting
to report our Scope 1 and 2 greenhouse emissions, and mapping a path forward
towards decarbonising our operations.
I would like to take this opportunity to extend my welcome to Michelle Jenkins
who joined the Board of Shanta Gold Limited in May 2021. We believe Michelle's
experience in exploration and mining finance across Africa brings a
complementary skill set and will be of considerable value as the Company
continues to develop its portfolio in East Africa. I would also like to thank
all of our employees for their continued commitment and hard work over the
last year, without which, these achievements would not have been possible.
Performance and operating highlights
For the third consecutive year, we replaced all annually mined ounces and
extended New Luika's mine life to at least the end of 2026 following a
successful exploration campaign that included recent discoveries at the
Porcupine South deposit. After the introduction of a third mill at New Luika
during the year, Shanta achieved record annual throughput of 834,607 tonnes
milled. The Group also reduced its gross debt to US$2.4 million, following the
repayment of the US$10 million convertible loan note in April 2021, further
strengthening our financial position.
Portfolio developments
The Singida Mine construction remains on track for first production in Q1
2023, adding a second revenue stream across the portfolio and further
strengthening our diversified portfolio of assets in East Africa. We remain
committed to growing and further defining our portfolio as evidenced by the
largest exploration programme ever carried out by the Group at the West Kenya
operations in a year which delivered consistently encouraging high-grade
drilling results, including spectacular visible gold. As a result, we are
confident of our ability to transform Shanta to a 100,000+ oz/p.a. producer in
2023 and deliver further sustainable returns to our shareholders.
Creating new opportunities for our communities
Developing the education, health and employment prospects of local communities
that neighbour our operations was a core priority of Shanta's community
development programme in 2021. The Group supported various schools and pupils
with the provision of much needed infrastructure and supplies. Due to the
Group's various water projects carried out during the year, a further 7,600
local residents now have access to clean running water. Furthermore, through
additional projects designed to better the employment prospects of our local
communities, approximately 2,000 farmers in Tanzania and 100 previously
unemployed youths can now look forward to the opportunity to earn year-round
income.
Apart from directly investing in our community engagement programmes, Shanta's
contribution to the Tanzanian and Kenyan economies through our operations have
been significant, totalling US$123.1 million in 2021. Shanta maintains an
excellent relationship with district, regional and national levels of the
Tanzanian Government. For the year 2021, Shanta was awarded three first place
awards at the national level of government for Local Content Performance,
Outstanding Performance in CSR Projects, and Environmental and Safety Issues
Compliance.
Year ahead
2022 is set to be an exciting year for the Group. Our ongoing exploration
programme will play an important role in sustainably extending and adding to
Shanta's production profiles over time, maximising the social impact of our
assets on the ground and improving returns for shareholders. We've announced
increased production guidance of 68,000 - 76,000 oz for 2022, with production
weighted towards the second half of the year once mining of the high-grade
Bauhinia Creek crown pillar has commenced. Construction at the Singida Gold
Mine will largely be completed in 2022 with significant milestones being
reached in the second half of 2022 and first pour in Q1 2023. Once gold
production commences at Singida, we are confident that the project will help
transform the Ikungi region in Central Tanzania for the benefit of the local
communities whilst also de-risking the business from a financial and
operational perspective as the Company begins generating significant cash flow
from two independent operations.
Anthony Durrant
Chairman
9 May 2022
Chief Executive Officer's review
Despite some operational challenges faced in 2021, Shanta is pleased to have
closed out the year in line with the revised guidance and forecasted
production growth for 2022.
We have replaced all mined ounces at New Luika, delivered some exceptional
high-grade results in our West Kenya drilling programme, continued our leading
health and safety record, and made good progress at Singida.
With the Group's robust business fundamentals providing a strong platform from
which to grow, we go into 2022 excited at the opportunities in front of us,
particularly the near-term opportunity to transform into a 100,000+oz/p.a.
producer, which we are confident will happen in Q1 2023 following first gold
pour at Singida.
Most importantly, Shanta continues to create a net-positive impact for its
stakeholders and communities in Tanzania and Kenya. Our focus on
sustainability and ESG during 2021 has been a highlight this year, ensuring
the Company is more accountable, transparent, and responsible in its corporate
purpose. This commitment to first class governance has been further enhanced
in Q1 2022 when we released our inaugural sustainability report.
HIGHLIGHTS
Exceptional safety record
This year, once again, Shanta delivered an outstanding safety record with an
incredible milestone achieved of over 8.0 million man-hours passed without a
Lost Time Injury ("LTI's"). The Company has now operated for over four years
without an LTI, earning itself a reputation as one of the safest mining
operations worldwide. The Group also achieved a Total Recordable Injury
Frequency Rate ("TRIFR") per 1 million hours worked of 0.67, a sixth
successive annual decline in injuries and significantly below the global
industry average of 2.94, as measured by the International Council of Mining
and Metals.
Building the Singida Gold Mine
The construction of the Singida mine is progressing on schedule. Several major
project milestones have now been completed on site with construction at
approximately 45% completion. Total capital expenditure at Singida during 2021
amounted to US$10.9 million and the project remains on track for first
production in Q1 2023, transforming Shanta Gold into a +100,000 oz/p.a.
producer with a diversified resource base.
The project also has considerable upside potential given its location within a
greenstone deposit, meaning it is well suited to further exploration growth.
Future drilling planned for 2022 will target areas within these mining
licenses with the aim of extending the reserves at Singida.
Shanta's exceptional safety standards are being carried through to its Singida
operations with a robust health and safety framework and zero LTIs since
commencement of construction.
The Singida Gold Mine directly employs 282 employees and contractors, all of
which are Tanzanian nationals, further highlighting the Group's commitment to
developing in country talent. We are confident that the project will transform
the Ikungi region once complete as we continue to invest in community
initiatives that benefit the people on the ground. We are delighted to have
already started this process by investing in the upgrade of local schools in
the Malumbi and Samburu villages, as well as the improvement of roads,
numerous water projects, and renovation of a local dispensary.
The West Kenya Project
During the year, an extensive drilling campaign was carried out at West Kenya
with the primary focus being to upgrade the high-grade resource at Isulu and
Bushiangala. Shanta is pleased to have achieved this goal, successfully
converting 117,000 oz grading 7.04 g/t Indicated at a conversion rate of over
100% in 2021. To date, this is the most consistently high-grade drilling
campaign the Group has ever conducted.
Success at West Kenya is a hugely exciting prospect for Shanta and its
stakeholders as the resource expands toward a multi-million ounce gold
district comparable with other prolific greenstone belts in the world.
Looking forward to 2022, Shanta aims to continue to deliver outstanding
drilling results. A third drill rig has been added to the operations as phase
two of the campaign looks to establish a Mineral Resource Estimate.
Portfolio-wide exploration
For a third consecutive year, Shanta has replaced all mined reserves at New
Luika, with 110,000 oz of new reserves added in 2021. During the year, the
Company invested US$4.4 million in exploration at New Luika resulting in the
upgrading of approximately 80,000 oz grading 4.31 g/t from Probable to Proven
Reserve category, significantly de-risking the 12-month production outlook.
Reserve-based mine life at New Luika has been extended again, now to the end
of 2026. JORC compliant reserves across the Group increased by 20,000 oz to
645,000 oz at a grade of 3.04 g/t. Shanta's reserves assume a long-term gold
price of US$1,350 /oz.
Off the back of the Group's 2021 exploration successes, the Board has approved
a US$6.9 million Tanzanian exploration budget for 2022.
VAT status on refunds
The Company's VAT receivable was US$26.9 million at the end of the year.
Following positive engagement with the Tanzanian Revenue Authority ("TRA"),
US$7.2 million was refunded. The remaining VAT receivable is subject to
verification audit before being available for further refunds or offsets
against corporate income tax. The Company has taken extensive legal and tax
advice to recover the VAT and is pursuing the appropriate avenues to recover
the full balance as discussed in note 3.
OPERATIONS REVIEW
New Luika Operations Review
The Group faced some operational challenges at New Luika during the year with
lower than anticipated grades being recovered and a faulty product received
from a supplier in the last quarter of the period. During the first half of
2021, underground mining at the Bauhinia Creek deposit intersected a structure
that dragged and pinched the ore zone for approximately 17 meters along strike
at the 600 level (360 vertical metres below the underground portal) and
approximately 37 meters at the 585 level. This resulted in total ounces
recovered for the year being 55,280 oz (2020: 82,978 oz). The processing
plant, however, continued to operate above its nameplate capacity with a
record annual throughput of 834,607 tonnes being milled, following the
installation of a third mill during the period, 7% greater than budgeted.
AISC for the year were US$1,439, higher than anticipated as a result of less
ounces being recovered. On an absolute basis, mining cash costs stayed
relatively flat with the Group maintaining its ongoing efforts to rigorously
review and manage expenses.
FINANCIAL OVERVIEW
Turnover for the year from sales of gold amounted to US$103.6 million,
compared to US$147.4 million in 2020. The 29.7% decrease in sales was driven
by the fall in gold ounces recovered. The company sold 57,517 oz of gold in
2021 (2020: 83,228 oz) and all sales were unhedged and completed at spot
price, with an average selling price of US$1,801 /oz during 2021 (2020:
US$1,495).
Operating profit for the year amounted to US$4.7 million (2020: US$43.8
million), the decrease being mainly attributable to the combination of less
revenue earned in the period, lower grades than anticipated being mined
resulting in higher production costs and the inclusion of a full year of
expenditure relating to the West Kenya Project. EBITDA(1) was US$19 million
(2020: US$63.9 million).
Through successful negotiations with the Tanzania Revenue Authority ("TRA"),
total VAT refunds of US$7.2 million were received by the Group in 2021, with a
further US$4.3 million being verified for refund by the TRA in January 2022.
During 2021, the Group repaid the US$10 million convertible loan note reducing
gross debt to US$2.4 million. The Group had an unrestricted cash balance of
US$13.2 million (2020: US$41.6 million) at year-end with further available
liquidity of 1,593 oz of unsold doré on hand.
Sustainability
The Group published its inaugural stand-alone Sustainability Report for 2021
which reports on the sustainability issues that are most material to Shanta's
stakeholders. ESG and Sustainability have risen to the top of corporate
agendas within both the mining sector and the wider business community, and
this report marks an important stage in Shanta's journey to greater
transparency and communication of how material ESG and sustainability issues
affect our business and what we are doing to address these.
In 2021, the Group has continued to operate safely and look after its team,
develop local communities, manage its resources and environmental impact, and
act responsibly and accountably at all times. The 2021 Sustainability Report
is available on the Shanta Gold website.
Managing Resources Responsibly and Mitigating Environmental Impact
Managing our water supply
Mining activities require a large and consistent water supply. This can be
challenging in the Songwe region where the year is divided into very wet and
very dry seasons. As a result, we have developed a focused water recovery
program at New Luika which targets the recovery of water used in tailings via
a Return Water Dam. In 2021, 33% of water usage was recovered (2020: 31%). The
team at New Luika work closely with the Lake Rukwa Basin Water Board to
communicate water conservation strategies in place, and Annual Water Reports
are prepared for the Board to monitor the status of water resources and
consumption. The Group remains committed to using water efficiently and
responsibly and continues to look for ways to manage our consumption and find
innovative solutions to water supply.
Responsible tailings and waste management
Safe management of tailings and other environmental issues are also crucial to
the safety of our communities and longevity of our operations. We were pleased
that during 2021, as in 2020, there were zero reportable environmental and
community incidents, and no issues or regulatory non-compliance were noted.
While our record is strong to date, we understand the risks associated with
tailings are a particular concern to our stakeholders and we are determined to
continue our focus on maintaining high levels of safe management and avoid
complacency.
Climate Change
As a responsible gold miner, it's important for the Group to stay on top of
the latest developments which affect our industry and the expectations of our
stakeholders. 2021 was an important year in the wider landscape around climate
change with businesses making long term commitments to combat their impact on
climate change. For several years, Shanta has been committed to efficient
energy usage at New Luika. This year, Shanta also calculated and reported its
Scope 1 and 2 Greenhouse Gas ("GHG") Emissions for the first time. We are
proud of how we benchmark against our peers, reporting one of the lowest GHG
intensities per ounce of gold produced. However, we recognise there are
important steps to take to make further progress in decarbonizing our
footprint and driving down emissions.
Putting our People First
The Group's achievements in the year are directly linked to the efforts of its
workforce working together with the same goal in mind, embracing opportunities
and staying motivated during a year that had its ups and down.
The Group's headcount, including employees at New Luika, Singida and West
Kenya Project, totalled 953 people at the end of 2021 (2020: 764 people) and
our Tanzanian staff span every discipline. The Executive Committee and Board
of Directors of SMCL are led almost entirely by Tanzanian nationals.
At the end of 2021, 99% of the Group's workforce were from our host countries
Tanzania or Kenya (2020: 99%) and a significant amount of SMCL's employees are
from local communities around New Luika and Singida. This demonstrates the
importance of our operations as a major employer for nearby villages and
towns, driving the local economy in an area that continues to suffer from high
unemployment and economic difficulties.
Community Investment
For many years Shanta has been a supporter of the social and economic
development of the communities located near its operations, and this remained
the case in 2021.
During the year, the Group continued to support local business with more than
80% of Shanta's procurement being sourced from local suppliers for the New
Luika and Singida operations in Tanzania. Similarly, over 60% of procurement
for the Company's Kenyan exploration activities are from local suppliers.
Shanta has a well-established CSR programme which has been developed through
the implementation of community initiatives that are devised with the direct
engagement of key community and regional stakeholders. Water, Education,
Livelihood and Health represent the core pillars to Shanta's community
investment projects. The projects are focused on the local communities
surrounding the New Luika, Singida and West Kenya operations.
Some of the projects the Group carried out in 2021 are mentioned below:
Education
Over the years, Shanta has believed that quality education is critical in
developing local communities and bringing about long-term change.
Shanta has been offering a sponsorship programme for underprivileged students
since 2014, and in 2021 a further 55 Secondary School and 120 Primary School
students from underprivileged families were provided with uniforms, shoes and
stationary. This support by Shanta will allow these students to attend school.
The company continued its work on making ICT equipment and learning available
during the year by commencing work on a computer lab at Saza Secondary School
following the construction of their computer lab in 2020.
Also, as part of the Group's initiative to improve educational infrastructure
in the area, in 2021, Shanta invested in an ablution block and three
classrooms at Saza Primary School, and two classrooms at Patamela Primary
School. Upgrading these facilities allows the school to attract the best
teachers who are typically put off by the difficulty of teaching with poor
infrastructure and accommodation.
Water
Access to clean drinking water is a challenge for the residents in the Songwe
region which has unpredictable rainfall and poor water infrastructure.
In 2021, Shanta invested in connecting the Luika River Dam to Mbangala village
via a 4km pipeline. This will provide approximately 7,600 people with reliable
and clean, running water. This project was achieved with the help of the
community who were encouraged through the advertisement of temporary work for
residents in helping trench the pipeline. 200 villagers took up the
opportunity and constructed the pipeline under supervision from Shanta's
Community and Engineering department.
Livelihood
Farming or artisanal mining are key income generating activities near Shanta's
New Luika, Singida and West Kenya operations. The Group supports a range of
livelihood programmes to encourage and grow the economic prospects of the
local communities and provide an alternate income generating opportunity to
the often illegal or dangerous artisanal mining operations.
At West Kenya, in partnership with KK Security Kenya Ltd, Shanta has supported
security guard training costs for 100 unemployed local youths from the project
area. All trained individuals have subsequently been offered formal employment
as a security guard in what was undoubtedly one of Shanta's most successful
projects of the year.
In 2021, Shanta continued to support the Saza Village Beekeepers group and
funded the construction of a honey processing plant which allows the group to
increase the volumes of raw honey they are able to process and thus use or
sell. The Group also invested in equipment (harvesting gear and replacing worn
out hives) and organized training on beehive inspection, honey harvesting and
marketing for 50 beekeepers to further the industry in the area.
Lastly, since 2016 Shanta has been working with local farmers near New Luika
to develop modern farming methods. This initiative aimed to introduce modern
farming methods to mitigate hunger, introduce commercial crops which grow well
in the community areas and find markets for the crop, in addition to the
formation of an Agriculture Market Cooperative Society (AMCOS) that unites
farmers and creates a one stop centre for all activities related to improving
commercial farming and improving farmers livelihood. The number of farmers now
enrolled in the programme has risen to more than 2,000 in 2021. During the
year, Shanta continued to support members of the programme, providing training
and donating fertilizer and pesticides. The Group is proud to announce that in
the year, the sesame harvest which was the result of a number of years' work
with the community yielded 1,500,000 kg, which at a price of $1 per kilogram
meant $1.5 million was distributed directly back into the scheme to support
the other needs of the farmers and their communities, including schooling,
general wellbeing, and family and medical needs.
Health
The availability of heath infrastructure and services in rural Tanzania and
Kenya continues to be a social challenge and the main cause of long-term
health issues in the communities.
Shanta partnered with the PharmAccess Foundation and AMREF to support the
Innovative Partnership for Universal Sustainable Healthcare (i-PUSH) project
in West Kenya which looks to connect at least half a million Kenyans to the
National Hospital Insurance Fund. This drive particularly targets women of
childbearing age, and once enrolled in i-PUSH they will have access to
subsidised health cover for a year.
During the year, the Group also made a contribution to the project donating
25% of the first year's annual premium for 300 low-income women in the Group's
project areas which triggers the remaining 75% contribution from i-PUSH. This
allows the enrolled women and their families to have healthcare cover.
Outlook
Annual production guidance has been set to approximately 68,000 - 76,000 oz at
AISC of US$1,050 - 1,250 /oz including development costs, in line with the
World Gold Council ("WGC") definition. 2022 gold production is weighted
approximately 65% towards the second half of the year reflecting mining of the
high-grade Bauhinia Creek crown pillar which began in April 2022. The crown
pillar consists of approximately 83,000 tonnes grading 8.4 g/t, equating to
around 22,500 ounces.
I would like to take this opportunity to thank our shareholders, employees,
members of the Board and our partners for their continued commitment to the
company and ongoing support throughout the period. With the near-term
introduction of the Singida mine to the Shanta portfolio, in addition to the
reserves replacement at New Luika, we are excited in the near and long-term
prospects of the Company and a journey towards becoming a diversified +100,000
oz/p.a. producer.
Eric Zurrin
Chief Executive
Officer
9 May 2022
SHANTA GOLD LIMITED
Consolidated statement of comprehensive income
31-Dec 31-Dec
2021 2020
Notes US$'000 US$'000
Revenue 103,571 147,431
Loss on non-hedge derivatives and other commodity contracts - (11,688)
Depreciation (16,533) (19,361)
Other cost of sales (61,078) (59,664)
Cost of sales (77,611) (79,025)
Gross profit 25,960 56,718
Administration expenses (10,160) (8,156)
Exploration and evaluation costs (11,133) (4,809)
Operating profit 4,667 43,753
Finance income 3,012 1,870
Finance expense (6,679) (6,622)
Profit / (Loss) before taxation 1,000 39,001
Taxation (7,168) (21,798)
(Loss) / profit for the year attributable to the equity holders of the parent (6,168) 17,203
Company
(Loss) / profit after taxation 17,203
(6,168)
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign entities which can subsequently be - -
reclassified to profit or loss
Total comprehensive (expense) / income attributable to the equity holders of (6,168) 17,203
the parent Company
(Loss) / earnings per share attributable to the equity holders of the parent
Company
Basic (loss) / earnings per share (US$ cents) 4 (0.589) 2.023
Diluted (loss) / earnings per share (US$ cents) 4 (0.589) 2.018
The loss / (profit) for the year and the total comprehensive (expense)/income
for the year are attributable to the equity holders of the parent Company.
There are no non-controlling interests. The items in the above statement are
derived from continuing operations.
Consolidated statement of financial position
31-Dec 31-Dec
2021 2020
Notes US$'000 US$'000
ASSETS
Non-current assets
Intangible assets 43,343 43,343
Property, plant and equipment 89,656 77,449
Right of use assets 2,313 3,260
Other receivables 22,698 27,560
Total non-current assets 158,010 151,612
Current assets
Inventories 27,234 30,040
Trade and other receivables 7,046 4,649
Restricted cash - 2,500
Cash and cash equivalents 13,214 41,582
Total current assets 47,494 78,771
TOTAL ASSETS 205,504 230,383
CAPITAL AND RESERVES
Equity
Share capital and premium 211,540 210,493
Share option reserve 148 338
Convertible loan notes reserve - 5,374
Translation reserve 450 450
Shares to be issued - 1,043
Retained deficit (55,356) (51,776)
TOTAL EQUITY 156,782 165,922
LIABILITIES
Non-current liabilities
Loans and other borrowings 5 3,454 4,270
Provision for decommissioning 7,500 6,346
Provision for deferred taxation 12,381 10,451
Total non-current liabilities 23,335 21,067
Current liabilities
Trade and other payables 17,169 12,208
Loans and other borrowings 5 2,823 5,713
Convertible loan notes - 9,999
Income tax payable 5,395 15,474
Total current liabilities 25,387 43,394
TOTAL LIABILITIES 48,722 64,461
TOTAL EQUITY AND LIABILITIES 205,504 230,383
The financial statements were approved and authorised for issue by the board
of Directors on 3 May 2022 and signed on its behalf by:
Eric Zurrin
Anthony Durrant
Chief Executive
Officer
Chairman
Consolidated statement of changes in equity
Share Share Share Convertible Translation Shares Retained Total
capital premium option loan notes reserve to be deficit Equity
reserve reserve issued
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Total equity 1 January 2020 118 158,322 473 5,374 450 627 (69,114) 96,250
Profit and total comprehensive income for the year - - - - - - 17,203 17,203
Total comprehensive income for year - - - - - - 17,203 17,203
Share based payments - 627 - - - 416 - 1,043
Lapsed options - - (135) - - - 135 -
Shares issued (net of expenses) 31 51,395 - - - - - 51,426
Total equity 31 December 2020 149 210,344 338 5,374 450 1,043 (51,776) 165,922
Loss and other comprehensive expense for the year - - - - - - (6,168) (6,168)
Total comprehensive expense for year - - - - - - (6,168) (6,168)
Share based payments 1 1,012 - - - (1,043) 30 -
Lapsed options - - (156) - - - 156 -
Exercised options - 34 (34) - - - - -
Repayment of convertible loan notes - - - (5,374) - - 5,374 -
Dividend payments - - - - - - (2,972) (2,972)
Total equity 150 211,390 148 - 450 - (55,356) 156,782
31 December 2021
Consolidated statement of cash flows
31-Dec 31-Dec
2021 2020
Notes US$'000 US$'000
Net cash flows generated from operating activities 6 12,586 34,608
Investing activities
Purchase of intangible assets - (8,549)
Purchase of plant and equipment (206) (142)
Purchase of right of use assets (14) (260)
Purchase of assets under construction (18,002) (4,654)
Capitalised mine development expenditure (8,494) (8,543)
Net cash flows used in investing activities (26,716) (22,148)
Financing activities
Ordinary shares issued (net of expenses) - 39,996
Loans repaid (2,655) (10,987)
Principal paid on lease liabilities (1,134) (1,087)
Interest paid (816) (1,975)
Purchase of silver to fulfil silver stream obligation (354) (331)
Buy-back of convertible loan notes (9,807) -
Equity dividend paid (2,972) -
Loans received (net of loan arrangement fees) 1,000 -
Movement in restricted cash 2,500 -
Net cash flows (used in) / received from financing activities (14,238) 25,616
Net (decrease) / increase in cash and cash equivalents (28,368) 38,076
Cash and cash equivalents at beginning of year 41,582 3,506
Cash and cash equivalents at end of year 13,214 41,582
1. General information
Shanta Gold Limited (the Company) is a limited company incorporated in
Guernsey. The address of its registered office is 11 New Street, St Peter
Port, Guernsey, GY1 2PF. The nature of the Group's operations and its
principal activities are set out in the Chairman's statement, the Chief
Executive Officer's review and the Directors' report published within the 2021
Annual Report.
These financial statements were approved and authorised for issue by the Board
of Directors on 9 May 2022 and signed on its behalf by Eric Zurrin and Anthony
Durrant.
2. Basis of preparation
The financial information set out herein does not constitute the Group's
statutory financial accounts. This information has been derived from the
Group's Annual Report and full financial statements for the year ended 31
December 2021 which were approved and authorised for issue on 9 May 2022 and
upon which the auditors have reported without qualification.
The Group's 2021 Annual Report and financial statements will be distributed to
shareholders and made available on the Company's website at
http://www.shantagold.com on 10 May 2022.
The Group's consolidated financial statements, which form part of the 2021
Annual Report, have been prepared in accordance with International Financial
Reporting Standards (IFRS and IFRIC Interpretations) issued by the
International Accounting Standards Board ("IASB"), as adopted by the European
Union ("IFRS").
The preparation of financial statements in compliance with adopted IFRS
requires the use of certain critical accounting estimates. It also requires
Group's management to exercise judgment in applying the Group's accounting
policies. The areas where significant judgements and estimates have been made
in preparing the financial statements and their effect are disclosed in the
2021 Annual Report.
3. Going Concern
Based on a review of the Group's budgets, cashflow forecasts and its ability
to flex its future spending to suit prevailing circumstances, the Directors
consider that the Group has adequate resources to continue in its operational
existence for the foreseeable future.
At 31 December 2021 the Group had an unrestricted cash balance of US$13.2
million. Despite delays in recovering VAT, the Group has sufficient operating
cashflows to continue to operate for the foreseeable future, including meeting
contractual debt repayments in the forecast period.
The Directors have concluded that these circumstances form a reasonable
expectation that the Group has adequate resources to continue in operational
existence, for the foreseeable future. For these reasons, the Directors
continue to adopt the going concern basis in preparing the Annual Report and
Accounts.
4. (Loss) / earnings per share
Basic (loss) / earnings per share is computed by dividing the (loss) / profit
attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the year.
31-Dec 31-Dec
2021 2020
US$'000 US$'000
(Loss) / profit for the year attributable to equity holders of Company (6,168) 17,203
Profit / (loss) used in calculation of basic earnings per share (see below) (6,168) 17,203
Basic earnings / (loss) per share (US cents) (0.589) 2.023
Weighted average number of shares in issue 1,047,885,766 850,274,078
There were no share incentives outstanding at the end of the year that could
potentially dilute basic earnings per share.
5. Loan and other borrowings
31-Dec 31-Dec
2021 2020
US$'000 US$'000
Current liabilities
Silver stream (1) 1,158 1,899
Loans payable to Exim Bank less than 1 year (2) - 2,636
Stanbic overdraft payable (3) 1,000 -
Lease liabilities 665 1,178
2,823 5,713
Non-current liabilities
Silver stream (1) 2,695 3,691
Lease liabilities 759 579
3,454 4,270
Total loans and other borrowings 6,277 9,983
The finance expense recognised in respect of loans and borrowings in the year
amounted to US$62,000 (2020: US$ 711,000).
(1) Silver Stream
The Company entered into a silver streaming agreement ("SSA") with Silverback
Limited ("Silverback"), a privately held Guernsey-based investment company,
under which Silverback paid the Company an advanced payment of US$5.25 million
on closing. Silverback will also pay the Company an ongoing payment of 10 per
cent. of the value of silver sold at the prevailing silver price at the time
of deliveries which will be made annually. The SSA relates solely to silver
by- product production from New Luika with minimum silver delivery obligations
totalling 608,970oz Ag over a 6.75-year period. There is a requirement to
settle any shortfall in silver delivery from the minimum obligation in cash.
The term of the SSA is 10 years during which time the Company will sell silver
to Silverback and receive ongoing payments of 10% of the silver sold at the
prevailing silver price. However, the Company has no minimum ounce obligations
after 2022. The payable silver by the Company to Silverback can be reduced
should there be any plant expansion as verified by an independent engineer.
Following an assessment from an independent engineer during 2021, a plant
expansion was verified as having occurred by the commissioning of a new mill
at NLGM. This change reduced the silver stream liability and has been
accounted for as an adjustment for the value in future estimates. The Silver
Stream liability was re-estimated in 2021 to include the extension to life of
mine plan. The liability is calculated using the forward silver price and
interest at the effective rate is imputed interest.
Silver Stream 31-Dec 31-Dec
US$'000 2021 2020
Balance at 1 January (5,590) (4,236)
Value of silver transferred 1,231 2,207
Interest at the effective interest rate (1,341) (1,443)
Adjustment for the value in future estimates 2,464 (940)
Change in estimate (6,17) (1,178)
At 31 December (3,853) (5,590)
(2) Loans payable to Exim Bank
In 2020 the Company had an outstanding term loan from Exim Bank (Tanzania)
Limited ("EXIM") repayable at the end of 2021. The loan had a variable
interest at 7.25% per annum and was secured against the New Luika Power
Station. US$2,500,000 of the originally drawn down balance was held as
restricted cash in accordance with the conditions of the agreement (note 18).
During 2021, the loan was repaid in full.
(3) Stanbic overdraft payable
The Company entered into a revolving loan facility with Stanbic Bank in
Tanzania to fund short term working capital. The facility is for US$ 5 million
of which US$ 1 million has been drawn down at year end. Each draw down is
repayable after a maximum of 180 days and bears interest at 10% per annum.
There are no securities held against the loan.
6. Net cash flows from operating activities
31-Dec 31-Dec
2021 2020
US$'000 US$'000
Profit / (Loss) before taxation for the year 1,000 39,001
Adjustments for:
Depreciation/depletion of tangible assets 16,039 18,956
Amortisation of right of use assets 961 1,163
Amortisation/write off of intangible assets - 14
Share based payment costs - 1,043
Unrealised exchange losses / (gains) (65) 75
Non-cash settlement of Silver Stream obligation (1,231) (2,207)
Finance income - decommissioning provision (547) (1,850)
Finance expense 1,515 6,622
VAT receivable credit adjustment 2,700 -
Operating cash flow before movement in working capital 20,373 62,817
Decrease / (increase) in inventories 2,806 (2,950)
Increase in receivables (4,431) (7,705)
Increase / (decrease) in payables 4,961 (11,404)
23,709 40,758
Taxation paid (11,124) (6,170)
Interest received 1 20
Net cash flow from operating activities 12,586 34,608
7. Events after reporting date
Following the year-end, the Directors have proposed a final dividend of 0.10
pence per share payable (2020: 0.10 pence), subject to the approval of
shareholders on 15 June 2022.
ENDS
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