REG - Shanta Gold Limited - Interim Results - 30 June 2022
05/09/2022 07:00
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RNS Number : 1899Y Shanta Gold Limited 05 September 2022
5 September 2022
Shanta Gold Limited
("Shanta Gold" or the "Company")
Interim results for the six months ended 30 June 2022
Shanta Gold (AIM: SHG), the East Africa-focused gold producer, announces its
unaudited interim financial results for the six months ended 30 June 2022
("H1" or the "Period"). The Company's asset portfolio includes New Luika Gold
Mine ("NLGM" or "New Luika") and Singida Project ("Singida") in Tanzania and
West Kenya Project ("West Kenya") in Kenya.
Eric Zurrin, Chief Executive Officer, commented:
"I am pleased to report that the performance of the Company has continued to
go from strength to strength throughout the first half of the year, and we
expect that to continue into H2 2022. Revenues and production materially
increased from Q1 to Q2 whilst our AISC dramatically improved quarter on
quarter. We have begun the second half of the year very strongly, with July
production of 7,259 oz, and August production of 6,707 oz, and we remain
confident of hitting guidance.
The Singida project continues to progress at a good pace with roughly 70% of
the construction activity now finished. We anticipate first gold being poured
in Q1 2023, transforming Shanta into a +100,000 oz gold producer with a
diversified asset base. In addition to, the high-grade West Kenya Project
continues to drive excitement with the MRE increasing by 31% during the Period
to 1.55 Moz.
Whilst we have to be wary of inflation and its impact on certain unavoidable
costs, we remain focused on our operational and capital discipline. As a
company, we remain committed to maintaining our strong relationships with the
local communities and authorities and operating in a responsible manner.
I would like to thank the Shanta employees for their work so far this year. We
believe the second half of the year is set to be a bright one for the company
and we look forward to updating shareholders in due course."
H1 2022 HIGHLIGHTS
Financial
· Revenue for the Period of US$51.9 million ("m") (H1 2021: US$57.8 m)
with revenue per Quarter being $19.8 m in Q1, increasing to $32.1 m in Q2;
· 2021 Final dividend of 0.10 pence per share paid in July 2022, with an
interim dividend declared of 0.10 pence per share, payable in November 2022;
· Operating cash flow before movement in working capital of US$7.3 m (H1
2021: US$16.6 m);
· AISC(3) of US$1,292 /oz was achieved in the Period, with AISC
improving dramatically quarter on quarter with an AISC of US$1,521 /oz in Q1
reducing to US$1,142 /oz in Q2;
· EBITDA(1) for the Period excluding West Kenya and Singida expenditure
was US$14.1 m (H1 2021: US$17.4 m);
· Capital expenditure of US$16.5 m (H1 2021: US$11.5 m);
o Including Singida capital development spend of US$10.9 m (H1 2021: US$3.8
m)
· Cash, and available liquidity(2) of US$14.3 million (FY 2021: US$15.9
m);
· VAT receivable due to the Company of US$27.7 m (FY 2021: US$26.9 m);
o US$3 m offset against H2 2020 corporation tax liability in the Period;
o US$1.4 m cash VAT refund received in the Period; and
· Post Period Shanta secured a US$20 m senior debt facility with the
Stanbic Bank of Tanzania of which funds were disbursed on 15 July 2022.
Operational
· Gold production of 28,947 oz (H2 2021: 28,842 oz), with production per
Quarter being 11,420 oz in Q1, increasing to 17,527 oz in Q2;
· 430,388 t milled (H1 2021: 392,287 t) from underground and open pit
sources;
· Average recoveries of 88.2% (H1: 88.9%); and
· Bauhinia Creek Crown Pillar successfully accessed in April, one month
ahead of schedule, with high grade material being mined consistent with
expectations.
West Kenya
· The Mineral Resource Estimate (MRE) at the West Kenya Project,
increased by 31% to 1.55 Moz and Indicated resources have increased by 221% to
378 Koz grading 11.70 g/t;
· Successful regional drilling results at the Ramula Regional Center,
within the West Kenya Project, were announced and a maiden Inferred resource
of 434 Koz grading 2.08 g/t was declared;
· Phase 2 of the ongoing diamond drilling campaign continues with the
Project seeking to infill 20 modelled zones at Isulu and 23 modelled zones at
Bushiangala. This drilling phase amounts to 65-75,000 m of planned drilling
and is due to be completed in Q4 2022; and
· The feasibility study workstream has commenced during the Period and
is currently supported by internal resources.
Singida
· Singida remains on track for first production in Q1 2023 transforming
Shanta Gold into a +100,000 oz/pa producer with a diversified resource base;
· To date, overall construction activity at the Project is approximately
70% complete and first production remains on track for Q1 2023.
· The majority of key infrastructure including bulk power, water,
buildings, and fencing are mostly completed;
· Installation of the Metso built Crushing Circuit is progressing well
and on schedule being 98% completed;
· Delivery of 80% of the Grinding & Gravity Circuit by South African
NCP with installation having begun in Q3;
· Ore stockpile levels total 97,918 tonnes grading 2.11 g/t for 6,647
contained ounces at the end of the Period;
· A total of 114,027 man-hours were worked at Singida in June 2022
resulting in total of 1,037,214 man-hours worked without Lost Time Injury
(LTI) for the Period. There were no Medical Treated Injuries (MTI) in the
Period which resulted to 0.00 TRIFR for the period and 0.00 TRIFR year to
date.
Interim Dividend
· Interim dividend of 0.10 pence per share declared, payable on 24
November 2022.
Outlook
· Annual production guidance reconfirmed at 68-76,000 oz for 2022
· Very strong start to Q3 production with July production of 7,259 oz,
and August production of 6,707 oz;
· The forecasted production for September-December remains strong with
81% of H2 2022 underground ounces having undergone grade control drilling;
· As outlined in Q1 and Q2 operational reports, cost inflation
predominantly from uncontrollable inputs being fuel, emulsion, steel supports,
and consumables has added approximately 10% to the overall costs. As such,
AISC cost guidance for 2022 has been increased from US$1,050-1,250 /oz to
US$1,150-1,275 /oz.
Post Period
· US$2.4 m VAT cash refund received and US$1.2 m received as an offset
against corporate income tax;
· Shanta secured a US$20 m senior debt facility agreement with the
Stanbic Bank of Tanzania of which funds were disbursed on 15 July 2022. As a
condition to this debt facility agreement, Shanta entered into zero-cost
collar contract over the 12 month period from August 2022 - July 2023 of 1,333
oz per month with floor price of US$1,600 per ounce and ceiling price of
US$1,950 per ounce.
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 and amortisation of intangible
assets
Note 2: Available liquidity has been derived as unrestricted cash, restricted
cash, and the sale value of doré available for sale at the end of the Period
(net of royalties and expected selling costs).
Note 3: AISC figures quoted for Q2 being $1,142 /oz and Q1 being $1,521 /oz
have been corrected from the AISC figures quoted in prior Q2 2022 and Q1 2022
Production and Operational Updates announced, being $1,303 /oz and $1,760 /oz
respectively. Previously announced AISC figures included the double counting
of waste capitalisation figures.
Analyst conference call and presentation
Shanta Gold will host an analyst conference call and presentation today, 05
September 2022, at 09:30am BST. Participants can access the call by dialling
one of the following numbers below approximately 10 minutes prior to the start
of the call or by clicking on the link below.
UK Toll-Free Number: +44 (0) 800 279 6894
UK Toll Number: +44 (0) 330 165 3641
PIN: 736335
https://events.globalmeet.com/Public/ClickToJoin/ZW5jPVRtVDNYanQ1ZVN6blozZDdzWEJKUHRzaHl1NW5jVGVodEtGUTJ0WFZJNjZuc3N4WEo0VHY2UT09
(https://events.globalmeet.com/Public/ClickToJoin/ZW5jPVRtVDNYanQ1ZVN6blozZDdzWEJKUHRzaHl1NW5jVGVodEtGUTJ0WFZJNjZuc3N4WEo0VHY2UT09)
Participant Passcode: 736335
The presentation will be available for download from the Company's website:
www.shantagold.com. A recording of the conference call will subsequently be
available on the Company's website.
Investor Conference Call
Shanta Gold is hosting a live investor presentation via the Investor Meet
Company platform today, 05 September 2022, at 10:30 am BST. The presentation
is open to all existing and potential shareholders and questions can be
submitted any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet Shanta
Gold via:
https://www.investormeetcompany.com/shanta-gold-limited/register-investor
(https://www.investormeetcompany.com/shanta-gold-limited/register-investor)
Investors who already follow Shanta Gold on the Investor Meet Company platform
will automatically be invited.
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 3727 1426
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 800 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
Financial Performance
Revenue for the Period of US$51.9 m (H1 2021: US$57.8 m) was generated from
the sale of 27,751 oz (H1 2021: 31,977 oz). The average realised price from
gold sales in the Period was US$1,870 /oz (H1 2021: US$1,807 /oz). Revenue for
H1 2022 was 10% lower than for H1 2021 reflecting the decrease in ounces sold,
partially offset by a higher average selling price. Gold production of 28,947
oz (H1 2021: 28,842 oz) was slightly higher than H1 2021, due to the
successful access and mining of the high grade Bauhinia Creek crown pillar in
Q2.
Cost of sales for the Period amounted to US$41.9 m, up 7% from US$39.3 m in H1
2021. The increase has been in line with expectations; current inflationary
pressures experienced within the global market during H1 2022 resulted in
increased fuel, chemical and metal products prices used directly in the
production process. Shipping and transport costs associated to these inputs
have also escalated when compared to H2 2021.
Administration expenses amounted to US$6.0 m, up 33% from US$4.5 m in H1 2021.
This was mainly driven by the ramping up of the West Kenya exploration
operations since H1 2021 with an additional US$0.8 m administrative costs seen
at West Kenya totalling US$1.9 m (H1 2021: US$1 m). A further US$0.3 m
increase is attributable to higher staff costs seen during the Period as the
industry remains competitive for skilled workers. Exploration and evaluation
costs amounted to US$4 m, lower than the US$4.6 m recorded in H1 2021 yet
consistent with the Company's exploration strategy and budget for 2022.
EBITDA for the Period excluding West Kenya and Singida expenditure was US$14.1
m (H1 2021: US$17.4 m).
Finance costs remained consistent at US$0.9 m (H1 2021: US$0.9 m).
A loss before tax of US$0.9 m was recorded for the Period (H1 2021: profit
before tax of US$8.6 m) reflecting the full expenditure of West Kenya of
US$5.4 m in the Income Statement. Loss after tax for the Period was US$1.3 m
(H1 2021: profit after tax of US$3.1 m), resulting in a basic loss per share
of US$0.128 cents (H1 2021: earnings per share of US$0.299 cents). Taxation
for the Period was US$0.5 m. Further information on taxation for the Period is
included below in Note 3 to the Consolidated Financial Information.
Adjusted Cash Operating Costs of US$1,064 /oz and AISC of US$1,292 /oz were
achieved in the Period. As outlined in Q1 and Q2 operational reports, cost
inflation predominantly from uncontrollable inputs being fuel, emulsion, steel
supports, and consumables has added approximately 10% to the overall costs. As
such, AISC cost guidance for 2022 has been increased from US$1,050-1,250 /oz
to US$1,150-1,275 /oz.
Financial Position
Total liabilities increased by US$9.3 m in the Period, driven primarily by a
US$8.9 m increase in trade creditors and accruals, which has normalised in Q3.
The increase in loans and borrowings of US$2.8 m and in the decommissioning
provision of US$0.7 m also contributed to the movement in total payables.
These increases were partially offset by a US$3.1m reduction in income tax
payable due to a US$3.1 m permitted VAT offset applied against corporate
income tax and tax payments made in Q1 of US$0.5 m.
Inventories were US$31.5 m at the end of the Period, up from US$26.0 m at 31
December 2021. This included 1,974 oz of gold bullion available for sale at
the end of the Period (1,461 oz at 31 December 2021). The value of spares and
consumables increased by US$1.4 m during the Period due to more orders being
made as lead times for critical plant items are becoming longer in the current
shipping markets.
Trade and other receivables (current and non-current) amounted to US$36.0 m at
the end of the Period, up US$1.1 m from 31 December 2021. The increase is
mainly attributable to an increase in the Company's VAT receivable which
increased by US$0.8 m to US$27.7 m. During the Period US$3.0 m of VAT
receivables were offset against the Company's 2020 corporation tax liability
in Tanzania with US$1.1 m being received as a cash refund. Remaining VAT
receivables are subject to verification audit by the TRA before being
available for further offsets and are treated as a non-current asset.
Cash flow
Gold production remained relative consistent, however sales in the Period was
13% lower than in H1 2021 The reduced sales was driven by low grade ore from
underground mining in Q1. Capital expenditure amounted to US$16.5 m, including
US$5.5 m of capitalised mine development costs and US$10.9 m at Singida.
Cash generated from operations before working capital amounted to US$7.3 m in
the Period. Working capital increased by US$0.6 m, accounted for by an
increase in inventories US$4.2 m, an increase in trade and other receivables
of US$1.2 m and an increase in trade and other payables US$6.0 m.
The Company's unrestricted cash balance at 30 June 2022 was US$7.6 m, down
from US$13.2 m at 31 December 2021. Net cash at the end of the Period amounted
to US$8.6 m (FY 2021: US$13.2 m).
Singida
The construction of the Singida Gold Mine continues to proceed on track with
first gold pour being expected in Q1 2023. As at the end of H1, the overall
project completion is at 63%. US$10.9 m in capital expenditure was incurred in
the Period.
The installation of the crusher and its components has progressed as planned
and is 98% complete with commissioning taking place in July. The majority of
the mill equipment is now on site with 80% of the mill components having been
delivered in Q2, with construction commencing on plan in Q3. The manufacture
of the Desorption and Smelting Unit is on track and is 40% complete, with an
estimated completion date of November 2022. Bulk Water Supply projects are now
100% completed with all tanks and water pumps installed. Lastly, the Bulk
Power Supply civil works are 80% complete with power installation planned for
July 2022.
Open pit mining continued to perform well during the Period with operations
focused on Gold Tree and Vivian pits. Overall production for Gold Tree pit was
22% above forecast. Overall ore stockpile level at Singida is 97,918 t grading
an average of 2.11g/t for 6,674 contained ounces.
The construction and operation of the Singida Gold Project continues to be run
with the highest safety standards in place with the operation reaching a
milestone of 1 million LTI free hours, since commencement of construction in
October 2020 which resulted in a 0.00 TRIFR year to date.
West Kenya Project
The results of the regional exploration drilling at the Ramula target were
announced in the Period, adding a further 434 Koz grading 2.08 g/t to total
resources at the West Kenya Project, delivering a 31% increase in the West
Kenya Resource and confirming Shanta's confidence in district scale potential.
Following a successful drilling campaign, Shanta received its latest results
at the West Kenya Project which were consistently high-grade. These
encouraging results included visible gold at three of the five holes reported,
and one showcasing grades of 46.7 g/t across a width of 14 metres at less than
150 metres vertical depth. The objective of the drilling campaign was to
upgrade the Mineral Resource Model at Isulu and Bushiangala, which was
achieved, with 378,000 oz grading 11.7 g/t being upgraded to the Indicated
Resources category.
Additional drilling re-started at the Ramula target on 23 June 2022, with the
aim to convert the recently declared 433,900 oz grading 2.08g/t Au Inferred
resource into Indicated Category. To date, all five infill diamond drill holes
have intercepted mineralised zones at the expected depth returning visible
gold in the seven previously identified zones and in one new zone.
Evidencing our confidence in this world class resource, the Feasibility Study
workstream for the West Kenya project is now underway which involves a
trade-off analysis of upgrading the existing Scoping Study for new areas
including Ramula and Kimingini versus progressing a Feasibility Study at the
deposits of the Liranda Corridor. To date, our internal team is leading the
workstream. Further updates on timing and scope will be provided in due
course.
Interim Dividend
Following consideration of the Company's financial condition and outlook, the
Board has declared an interim dividend of 0.10 pence per share (H1 2021: 0.10
pence) expected to be paid on 24 November 2022. This interim dividend, which
will be paid gross, is expected to align with the following proposed
timetable:
Ex-div date: 20 October 2022
Record date: 21 October 2022
Payment date: 24 November 2022
Post Period
Shanta secured a US$20 m senior debt agreement with the Stanbic Bank of
Tanzania of which funds were disbursed on 15 July 2022. As a condition to this
debt facility agreement, Shanta entered into zero-cost collar contract over
the 12 months from August 2022 - July 2023 of 1,333 oz per month with floor
price of US$1,600 per ounce and ceiling price of US$1,950 per ounce.
US$2.4 m VAT cash refund received and US$1.2 m received as an offset against
CIT post Period.
Outlook
Annual production guidance reiterated at 68-76,000 oz for 2022.
Very strong start to Q3 production with July production of 7,259 oz, and
August production of 6,707 oz.
The forecasted production for September-December remains strong with 81% of H2
2022 underground ounces planned for mining having undergone grade control
drilling.
As outlined in Q1 and Q2 operational reports, cost inflation predominantly
from uncontrollable inputs being fuel, emulsion, steel supports, and
consumables has added approximately 10% to the overall costs. As such, AISC
cost guidance for 2022 has been increased from US$1,050-1,250 /oz to
US$1,150-1,275 /oz.
SHANTA GOLD LIMITED
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2022
6 months 6 months Year
ended ended ended
30-Jun-22 30-Jun-21 31-Dec-21
US$'000 US$'000 US$'000
Note Unaudited Unaudited Audited
Revenue 51,908 57,772
103,571
Depreciation (7,920) (7,757) (16,533)
Other cost of sales (33,990) (31,540) (61,078)
Cost of sales (41,910) (39,297)
(77,611)
Gross profit 9,998 18,475
25,960
Administration expenses (5,980) (4,548) (10,160)
Exploration and evaluation costs (4,039) (4,558) (11,133)
Operating (loss)/profit (21) 9,369 4,667
Finance income 10 42 3,012
Finance expense (863) (861) (6,679)
(Loss)/profit before taxation (874) 8,550 1,000
Taxation 3 (2,239) (5,421) (7,168)
(Loss)/profit for the Period / year attributable to equity holders of the (3,113) 3,129 (6,168)
parent company
(Loss)/profit after taxation (3,113) 3,129 (6,168)
Total comprehensive (loss)/profit attributable to equity shareholders of (3,113) 3,129 (6,168)
parent company
Basic (loss)/earnings per share (US$ cents) 4 (0.297) 0.299 (0.589)
Diluted (loss)/earnings per share (US$ cents) 4 (0.297) 0.299 (0.589)
SHANTA GOLD LIMITED
Consolidated Statement of Financial Position
As at period ended 30 June 2022
30-Jun 30-Jun 31-Dec
2022 2021 2021
US$'000 US$'000 US$'000
Note Unaudited Unaudited Audited
Non-current assets
Intangible assets 43,343 43,343 43,343
Property, Plant and Equipment 97,968 81,358 89,656
Right of use assets 2,212 2,795 2,313
Other receivables 24,111 27,417 22,698
Total non-current assets 167,634 154,913 158,010
Current assets
Inventories 31,472 25,998 27,234
Trade and other receivables 6,805 4,275 7,046
Cash and cash equivalents 7,592 24,839 13,214
Total current assets 45,869 55,112 47,494
Total assets 213,503 210,025 205,504
Capital and reserves
Share capital and premium 211,540 211,506 211,540
Share option reserve 148 338 148
Translation reserve 450 450 450
Retained deficit (58,469) (44,727) (55,356)
Total equity 153,669 167,567 156,782
Non-Current liabilities
Loans and borrowings 5 2,693 3,573 3,454
Provision for decommissioning 8,189 6,642 7,500
Provision for deferred taxation 11,984 11,229 12,381
Total non-current liabilities 22,866 21,444 23,335
Current liabilities
Trade and other payables 26,113 13,295 17,169
Loans and borrowings 5 6,377 1,816 2,823
Income tax payable 4,478 5,903 5,395
Total current liabilities 36,968 21,014 25,387
Total liabilities 59,834 42,458 48,722
Total equity and liabilities 213,503 210,025 205,504
The notes that follow in this report form part of these financial statements.
The financial statements were authorised and approved for issue by the Board
of Directors and authorised for issue on 4 September 2022
SHANTA GOLD LIMITED
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2022
Share Capital Share Premium Share Option Reserve Convertible Debt Reserve Translation Reserve Shares to be Issued Reserve Retained Deficit Total Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2022 150 211,390 148 - 450 (55,356) 156,782
Loss for the Period - - - - - - (3,113) (3,113)
Share based payments - - - - - - - -
Reserve transfer - - - - - - - -
At 30 June 2022 (Unaudited) 150 211,390 148 - 450 - (58,469) 153,669
At 1 January 2021 149 210,344 338 5,374 450 1,043 (51,776) 165,922
Profit for the Period - - - - - - 3,129 3,129
Reserve transfer - - - (5,374) - - 5,374 -
Share based payments 1 1,012 - - - (1,043) 30 -
Dividends paid - - - - - - (1,484) (1,484)
At 30 June 2021 (Unaudited) 150 211,356 338 - 450 - (44,727) 167,567
At 1 January 2021 149 210,344 338 5,374 450 1,043 (51,776) 165,922
Loss for the year - - - - - - (6,168) (6,168)
Share based payments 1 1,012 - - - (1,043) 30 -
Lapsed options - - (156) - - - 156 -
Exercised options - 34 (34) - - - - -
Repayment of convertible loan notes - - - (5,374) - - 5,374 -
Shares issued (net of expenses) - - - - - - (2,972) (2,972)
At 31 December 2021 (Audited) 150 211,390 148 - 450 - (55,356) 156,782
SHANTA GOLD LIMITED
Consolidated Statement of Cash flows
for the six months ended 30 June 2022
6 months 6 months Year
ended ended ended
30-Jun-22 30-Jun-21 31-Dec-21
US$'000 US$'000 US$'000
Note Unaudited Unaudited Audited
Net cash flows from operating activities 6 7,315 8,059 12,586
Investing activities
Purchase of intangible assets - - -
Purchase of plant and equipment - (237) (206)
Purchase of right of use assets (203) - (14)
Purchase of assets under construction (10,928) (6,675) (18,002)
Capitalised mine development expenditure (4,889) (4,561) (8,494)
Net cash flows used in investing activities (16,020) (11,473) (26,716)
Financing activities
Loans repaid (1,182) (2,655) (2,655)
Buyback of convertible loan notes - (9,807) (9,807)
Principal paid on lease liabilities - (736) (1,134)
Interest paid (193) (790) (816)
Dividends paid - (1,484) (2,972)
Movements in restricted cash - 2,500 2,500
Purchase of silver to fulfil silver stream obligation - (357) (354)
Loans received (net of loan arrangement fees) 4,458 - 1,000
Net cash flows received from / (used in) financing activities 3,083 (13,329) (14,238)
Net (decrease) in cash and cash equivalents (5,622) (16,743) (28,368)
Cash and cash equivalents at beginning of Period / year 13,214 41,582 41,582
Cash and cash equivalents at end of Period / year 7,592 24,839 13,214
SHANTA GOLD LIMITED
Notes to the Consolidated Financial
Information
for the six months ended 30 June 2022
1. General information
Shanta Gold Limited (the "Company") is a limited company incorporated in
Guernsey. The Company is listed on the London Stock Exchange's AIM market. The
address of its registered office is 11 New Street, St Peter Port, Guernsey,
GY1 2PF. The interim consolidated financial information was approved by the
Board and authorised for issue on 04 September 2022.
2. Basis of preparation
The consolidated interim financial information has been prepared using
policies based on International Financial Reporting Standards (IFRS and IFRIC
interpretations) issued by the International Accounting Standards Board
("IASB") as adopted for use in the UK. The consolidated interim financial
information has been prepared using the accounting policies which will be
applied in the Group's financial statements for the year ending 31 December
2022.
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 30 June 2022 the Group had an
unrestricted cash balance of US$7.6 million, net cash of US$8.6 million and
the Group has sufficient operating cashflows to continue to operate for the
foreseeable future. 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
consolidated interim information.
The consolidated interim financial information for the six months ended 30
June 2022 has been reviewed by the Company's Auditor, BDO LLP in accordance
with International Standard of Review Engagements 2410, Review of Interim
Financial Information Performed by the Independent Auditor of the Entity and
were approved for issue on 04 September 2022. The consolidated interim
financial information for the Period 1 January 2022 to 30 June 2022 are
unaudited and incorporate unaudited comparative figures for the interim Period
1 January 2021 to 30 June 2021 and the audited comparative figures for the
year to 31 December 2021. It does not include all disclosures that would
otherwise be required in a complete set of financial statements and should be
read in conjunction with the 2021 Annual Report.
The half year financial information for the six months ended 30 June 2022 set
out in this document does not comprise the Group's statutory accounts as
defined in the Companies (Guernsey) Law, 2008 and accordingly this half year
financial information is not considered to be the company's statutory
accounts. The statutory accounts for the year ended 31 December 2021, which
were prepared under UK endorsed IFRS, were reported on by the auditors; their
report was unqualified and did not include reference to any matters to which
the auditor drew attention by way of emphasis.
SHANTA GOLD LIMITED
Notes to the Consolidated Financial
Information
for the six months ended 30 June 2022 (continued)
The same accounting policies, presentation and methods of computation are
followed in the interim consolidated financial information as were applied in
the Group's latest annual audited financial statements except for those that
relate to new standards and interpretations effective for the first time for
periods beginning on (or after) 1 January 2022, and will be adopted in the
2022 annual financial statements.
The following new standards and interpretations became effective on 1 January
2022 and have been adopted by the Group. None of these amendments are
considered to have had a material effect in the Period.
· IFRS 16: Proceeds before intended use
· IAS 37: Cost of fulfilling a contract
· IFRS 3: Business combinations - Reference to the conceptual
framework
2.1 Critical accounting estimates, assumptions and judgements:
The estimates and associated assumptions made in the preparation of these
interim financial statements are consistent with the estimates and assumptions
made in the preparation of the Annual Financial Statements for 2021, with the
exception of the inflation rate for the decommissioning provision being
increased to 3% during the Period.
3 Taxation
Effective 1 January 2008, the Company is taxed at the standard rate of income
tax for Guernsey companies which is 0%. Taxation for other jurisdictions is
calculated at the rates prevailing in the respective jurisdictions.
Tax charge for the Period relates to:
30-Jun-22 30-Jun-21 31-Dec-21
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Current tax charge 2,635 4,643 5,238
Deferred tax charge (397) 778 1,930
Net charge 2,238 5,421 7,168
The tax charge for the Period can be reconciled to the (loss) / profit before
taxation per the statement of comprehensive income as follows:
SHANTA GOLD LIMITED
Notes to the Consolidated Financial
Information
for the six months ended 30 June 2022 (continued)
30-Jun-22 30-Jun-21 31-Dec-21
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
(Loss) / Profit before taxation (874) 8,550 1,000
Tax at the standard tax rate
Tanzanian Corporation tax at 30% (265) 2,565 300
Different tax rates applied in overseas jurisdictions 575 859 1,180
Permanent adjustments (109) 1,727 2,905
Unrecognised taxable losses in subsidiaries 1,960 270 2,395
Adjustments in respect of prior periods 77 - 388
Tax charge 2,238 5,421 7,168
During the Period US$3.0 m of VAT receivables were offset against the
Company's brought forward corporation tax liability in Tanzania
4 (Loss) / earnings per share
Basic (loss) / earnings per share is calculated by dividing the profit
attributable to the ordinary shareholders by the weighted average number of
ordinary shares outstanding during the Period/year.
At 30 June 2021 and at 31 December 2021 there were no share incentives
outstanding that could potentially dilute basic (loss) / earnings per share
in the future.
Unaudited Unaudited Audited
30-Jun-22 30-Jun-21 31-Dec-21
Loss Weighted avg no of shares Per share amount Profit Weighted avg no of shares Per share amount Loss Weighted avg no of shares Per share amount
US$'000 ('000) (Cents) US$'000 ('000) (Cents) US$'000 ('000) (Cents)
Basic (loss)/earnings (3,113) 1,047,886 (0.297) 3,129 1,047,508 0.299 (6,168) 1,047,886 (0.589)
Diluted (loss)/earnings (3,113) 1,047,886 (0.297) 3,129 1,047,508 0.299 (6,168) 1,047,885 (0.589)
SHANTA GOLD LIMITED
Notes to the Consolidated Financial
Information
for the six months ended 30 June 2022 (continued)
5 Loans and borrowings
30-Jun-22 30-Jun-21 31-Dec-21
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Amounts payable within one year
Silver stream ((1)) 1,190 1,188 1,158
Loan payable to Exim Bank((2)) 277 - -
Stanbic revolving credit facility payable((3)) 4,000 - 1,000
Lease Liabilities 910 628 665
6,377 1,816 2,823
Amounts payable after one year
Silver stream ((1)) 2,093 3,240 2,695
Lease liabilities 600 333 759
2,693 3,573 3,454
(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$5.25 million
on closing. Silverback will also pay the Company an ongoing payment of 10 per
cent of the value of silver sold at the prevailing silver price at the time of
deliveries which will be made annually. The SSA relates solely to silver by-
product production from New Luika with minimum silver delivery obligations
totalling 608,970oz Ag over a 6.75-year period. There is a requirement to
settle any shortfall in silver delivery from the minimum obligation in cash.
The term of the SSA is 10 years during which time the Company will sell silver
to Silverback and receive ongoing payments of 10% of the silver sold at the
prevailing silver price. However, the Company has no minimum ounce obligations
after 2022. The payable silver by the Company to Silverback can be reduced
should there be any plant expansion as verified by an independent engineer.
Following an assessment from an independent engineer during 2021, a plant
expansion was verified as having occurred by the commissioning of a new mill
at NLGM. This change reduced the silver stream liability and was accounted for
as an adjustment for the value in future estimates. The Silver Stream
liability was re-estimated in 2021 to include the extension to life of mine
plan. The liability is calculated using the forward silver price and interest
at the effective rate is imputed interest.
(2) Loans Payable to Exim Bank
During the Period, the Company entered into an Insurance Premium Finance
Arrangement with Exim Bank (Tanzania) Limited ("EXIM"). The loan has a
variable interest at 4.55% per annum and is repayable in 10 monthly
instalments, being repayable by the end of 2022.
(3) Stanbic Revolving Credit Facility
The Company entered into a revolving loan facility with Stanbic Bank in
Tanzania to fund short term working capital. The facility is for US$ 5 million
of which US$ 4 million has been drawn down at Period 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.
SHANTA GOLD LIMITED
Notes to the Consolidated Financial
Information
for the six months ended 30 June 2022 (continued)
6 Net Cash flows from Operating activities
30-Jun 30-Jun 31-Dec
2022 2021 2021
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
(Loss) / profit before tax (874) 8,550 1,000
Adjustments for:
Depreciation / depletion of assets 7,658 7,564 16,039
Amortisation of right of use assets 305 465 961
Unrealised exchange gains (18) (60) (63)
Fair value adjustments (94) - -
Non-cash settlement of Silver Stream obligation (496) (739) (1,231)
Finance income (10) (40) (3,012)
Finance expense 863 861 6,679
Operating cash inflow before movement in working capital 7,334 16,601 20,373
Movements in working capital:
(Increase) / Decrease in inventories (4,238) 4,042 2,806
(Increase) in receivables (1,170) (3,677) (4,431)
Increase in payables 5,962 1,086 4,961
7,888 18,052 23,709
Taxation paid (573) (9,993) (11,124)
Interest received - - 1
Net cash flow from operating activities 7,315 8,059 12,586
INDEPENDENT REVIEW REPORT TO SHANTA GOLD LIMITED
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2022 is not prepared, in all
material respects, in accordance the London Stock Exchange AIM Rules for
Companies.
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2022 which comprises the consolidated statement of comprehensive income,
the consolidated statement of financial position, the consolidated statement
of changes in equity, the consolidated statement of cash flows and related
notes.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in prepared in a form consistent with that which will
be adopted in the Company's annual accounts having regard to the accounting
standards applicable to such annual accounts.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or that the
Directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the Group to
cease to continue as a going concern.
Responsibilities of Directors
The Directors are responsible for preparing the half-yearly financial report
in accordance withthe London Stock Exchange AIM Rules for Companies which
require that the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the Company's annual accounts
having regard to the accounting standards applicable to such annual accounts.
In preparing the half-yearly financial report, the Directors are responsible
for assessing the Group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London
Stock Exchange AIM Rules for Companies for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly disclaim any
and all such liability.
BDO LLP
Chartered Accountants
London, UK
4 September 2022
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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