REG - Shanta Gold Limited - Interim Results - 30 June 2023
20/09/2023 07:00
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RNS Number : 9897M Shanta Gold Limited 20 September 2023
20 September 2023
Shanta Gold Limited
("Shanta Gold", "Company" or the "Group")
Interim results for the six months ended 30 June 2023
Shanta Gold (AIM: SHG), the East Africa-focused gold producer, announces its
unaudited interim financial results for the six months ended 30 June 2023
("H1" or the "Period"). The Company's asset portfolio includes New Luika Gold
Mine ("NLGM" or "New Luika") and Singida Gold Mine ("Singida") in Tanzania and
West Kenya Project ("West Kenya") in Kenya.
Eric Zurrin, Chief Executive Officer, commented:
"Today we have delivered another set of record-breaking results, reflecting
the huge effort from the team at Shanta over the first half of 2023. We
continue to reach new heights at New Luika and Singida, with record half year
revenues of US$88.3 million. This was driven by a 55 per cent increase in gold
production as well as the benefits of a diversified portfolio and strong gold
price. As a result, EBITDA was up 140 per cent to US$33.9m.
We are very confident in the multiple growth opportunities that exist across
the portfolio at Shanta. During the period, we commenced targeted exploration
programmes at Singida to unlock nearly 75 per cent of additional resource not
currently in the mine plan and outline new targets, as well as undertaking
further exploration and infill drilling at West Kenya which we believe will
uncover further significant resources and make new discoveries. In the
meantime, our strong production performance, underpinned by an improved output
from New Luika, drives us closer towards our guidance of 90,000-98,000 oz gold
production for 2023, which I am pleased to reconfirm today.
"As we deliver on our strategy, we continue to deliver value for our
shareholders. Today the Board has declared an interim dividend of 0.10 pence
per share, the sixth consecutive period with a dividend paid, totalling cash
payments of US$8.0 million since 2021."
H1 2023 HIGHLIGHTS
Financial and Operating
· Revenues of US$88.3 million ("m") (H1 2022: US$51.9 m);
· Gold production of 44,771 oz (H1 2022: 28,947 oz);
· EBITDA(1) of US$33.9 m (H1 2022: US$14.1 m);
· EBITDA margin of 38.4% (H1 2022: 27.5%);
· Profit before tax of US$22.7 m, up from loss of US$0.9 m in H1 2022;
· Profit after tax of US$12.7 m, up from loss of US$3.1 m in H1 2022;
· Cash, and available liquidity(2) of US$25.0 million (FY 2022: US$10.4
m);
· Operating Costs and All in Sustaining Costs ("AISC"(3)) tracking in
line with annual guidance for NLGM and ahead of guidance for Singida:
o NLGM: US$1,009 /oz and US$1,293 /oz
o Singida: US$655 /oz and US$825 /oz
· Net debt of US$8.6 m (FY 2022: US$13.6 m);
· Outstanding safety record: TRIFR rate of 0.00 in Q2 and 0.00 YTD and
zero LTIs; and,
· No gold hedging - 100% exposed to spot gold price.
Singida
· Tanzania's first new medium-scale gold mine in a decade;
· Significant addition to the Shanta portfolio already delivering free
cash to the Group;
· Efficient ramp up from first gold pour on 31 March to full commercial
production on 1 June;
· Above target production during the Period from improved gold
recoveries and purity; and,
· Targeted exploration programmes now underway to unlock nearly 75% of
resource not included in reserve-based mine plan and outline new targets.
New Luika
· Gold production of 34,655 oz (H1 2022: 28,947), ahead of H1 internal
forecasts;
· 437,456 tonnes ("t") milled (H1 2022: 430,388 t), ahead of plan; and,
· Stable and safe operations with zero LTIs in H1 2023 (H1 2022: Nil)
and March onwards producing over 6,000 oz per month.
West Kenya
· Resource update announced at West Kenya to 1.76 Moz grading 5.55 g/t
Au following FY22 successful exploration and drilling campaign;
· Technical studies commenced at West Kenya with work on long lead
areas including environmental and social baseline studies ongoing as part of
feasibility study;
· Exploration and infill drilling recommenced during the Period
targeting conversion of ounces to Indicated category, resource extensions at
Isulu and Ramula deposits, and testing proximal new targets; and,
· Sterilisation drilling on the potential mining infrastructure
underway.
Outlook
· Annual production guidance reconfirmed at 90,000-98,000 oz gold for
2023; and,
· AISC cost guidance for 2023 has been reiterated at US$1,200-1,300 /
oz gold for NLGM and US$1,300-1,400 / oz gold for Singida.
Post Period
· Interim dividend of 0.10 pence per share (H1 2022: 0.10 pence)
declared by the Board and expected to be paid on 27 November 2023. This will
be the sixth consecutive half-year period with a dividend paid, totalling
shareholder returns of US$8.0 million cash since 2021.
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 exploration expenditure at the West Kenya Project totalling US$0.9
million.
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).
Analyst Conference Call and Presentation
Shanta Gold will host an analyst conference call and presentation today, 20
September 2023, at 9:00 am BST. Participants can access the call by
registering via the link below.
https://secure.emincote.com/client/shanta/shanta005/vip_connect
(https://secure.emincote.com/client/shanta/shanta005/vip_connect)
The presentation will be available for download from the Company's website:
www.shantagold.com (http://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, 20 September 2023, at 10:00 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
Michal Devine (CFO)
Nominated Adviser and Broker
Liberum Capital Limited
Scott Mathieson / Kane Collings / Nikhil Varghese +44 (0) 20 3100 2000
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 625 koz grading 2.91 g/t Au, and exploration licences covering
approximately 500 km(2) in the country. Alongside New Luika and Singida,
Shanta also owns the West Kenya Project in Kenya and licences with resources
of 1.7 million ounces including 722 koz in the Indicated category grading
11.45 g/t Au. With a strong balance sheet, a growing diversified portfolio and
consistent dividend payments. 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 1,051 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$88.3 m (H1 2022: US$51.9 m) was generated from
the sale of 45,402 oz (H1 2022: 27,751 oz). The average realised price from
gold sales was US$1,938 /oz (H1 2022: US$1,870 /oz). Revenue for H1 2023 was
70% higher than for H1 2022, reflecting the increase in ounces sold at NLGM,
new ounces sold from Singida, and a higher average selling price.
Gold production of 44,771 oz (H1 2022: 28,947 oz) was significantly higher
than H1 2022, due to Singida contributing 10,065 oz during the Period, and a
stronger performance at NLGM from improved equipment availability, power
reliability and consistent grades being mined from the Luika underground
("UG") stopes.
Cost of sales for the Period (excluding depreciation) amounted to US$49.4 m,
up 45% from US$34.0 m in H1 2022. US$7.9 m of the increase was driven by
Singida operating and selling expenses following the commencement of gold
production in the Period. US$2.1 m of the increase was due to higher open pit
mining costs at New Luika from more open pit mining during the period with
1,739,149 tonnes mined (H1 2022: 1,059,443 tonnes). Royalty fees paid to the
government were US$1.3 m higher from additional ounces sold at a higher sales
price. 7,068 more tonnes were milled compared with H1 2022, leading to a
US$1.3 m increase in processing costs. The remaining increase was driven by
higher maintenance costs and continued inflationary pressures within the
global market impacting fuel, chemical and metal products prices used directly
in the production process.
Administration expenses amounted to US$3.5 m, down 42% from US$6.0 m in H1
2022. This was mainly driven by less activity at the West Kenya Project in Q1
2023 as the Company prioritised funds for the completion of the Singida plant
build, and a foreign exchange gain seen during the Period as a result of the
US Dollar strengthening against the Tanzania Shilling when compared to a
foreign exchange loss in H1 2022.
Exploration and evaluation costs amounted to US$1.5 m, lower than the US$4.0 m
recorded in H1 2022, reflecting the limited exploration activity during Q1 as
the Company focused on completing construction at Singida. This is consistent
with the Company's exploration strategy and budget for 2023, and exploration
drilling has recommenced at all three assets.
EBITDA(1) for the Period was US$33.9 m (H1 2022: US$14.1 m). The increase is
driven by the Singida Gold Mine commencing gold production during the Period,
higher than forecast gold production at New Luika, and a sustained higher gold
selling price.
Finance costs increased slightly to US$1.0 m (H1 2022: US$0.9 m) due to June
interest costs associated with the long-term Stanbic loan agreement being
recognised in profit and loss post commercial production (Jan-May interest
costs were capitalised as part of the Singida Mining Asset).
A profit before tax of US$22.7 m was recorded for the Period (H1 2022: loss
before tax of US$0.9 m) reflecting strong production at New Luika, Singida
commencing production and higher gold selling prices. Profit after tax for the
Period was US$12.7 m (H1 2022: loss after tax of US$1.3 m), resulting in a
basic profit per share of US$1.206 cents (H1 2022: loss per share of US$0.128
cents). Taxation for the Period was US$10.1 m comprising a US$6.7 m current
tax charge (H1 2022: US$2.6 m) and a US$3.4 m deferred tax liability charge
(H1 2022: deferred tax asset credit US$0.4 m). The increase in current tax is
due to a significant increase in profits for the Period. The increase in
deferred tax is driven by temporary differences recognised on Singida assets
transfer from assets under construction to depreciable asset classes. Deferred
tax was not recognised on these assets in previous Periods as they did not
affect the accounting Profits or taxable income at that time. This changed
upon Singida commencing commercial production as these assets are now being
depreciated. Further information on taxation for the Period is included below
in Note 3 to the Consolidated Financial Information.
Adjusted Cash Operating Costs of US$1,009 /oz (1% below budget) and AISC of
US$1,293 /oz (4% below budget) were achieved at New Luika during the Period.
As outlined in Q1 and Q2 operational reports, the first half of the Period saw
slightly lower than budgeted production and higher royalty payments,
contributing to a higher AISC, Q2 saw a lower AISC due to more ounces
produced, improved equipment reliability and lower maintenance costs.
Adjusted Cash Operating Costs of US$655 /oz (36% below budget) and AISC of
US$825 /oz (32% below budget) were achieved at Singida during the Period.
Operating costs and AISC were better than budget due to more ounces produced
and lower than budgeted Open Pit mining and Processing costs. Management are
continuing to monitor actuals versus life of mine forecasts to assess the long
run steady state cost structures.
Financial Position
Total liabilities increased by US$14.8 m in the Period compared with Year End.
This was driven primarily by the deferred tax provision increasing by US$3.4 m
from Year End due to the recognition of deferred tax for the Singida assets
transferred from assets under construction upon commercial production. In
addition, US$5.2 m of the increase is attributable to loans and borrowings.
These rose due to a US$3.0 m net drawdown in the Stanbic working capital
facility, and a US$2.0 m increase in finance lease obligations associated with
the purchase of a new Sandvik TH551i underground truck, a new Sandvik drill
rig, and lab equipment. Trade payables and accruals were US$4.2 m higher than
Year End reflecting a rise in Singida payables from the mine being in full
commercial production. The decommissioning provision estimate at Singida also
increased by US$1.9 m due to the completion of the TSF, processing plant
infrastructure, and further disturbance at Gold Tree Open Pit.
Inventories were US$36.7 m at the end of the Period, up slightly from US$36.2
m at 31 December 2022. This included 3,290 oz of gold bullion available for
sale at the end of the Period (3,963 oz at 31 December 2022). The increase was
primarily driven by additional tonnes in the NLGM stockpile at Period End. The
spares and consumables balance was consistent with Year End.
Trade and other receivables (current and non-current) amounted to US$16.2 m at
the end of the Period, up US$5.7 m from US$10.5 m 31 December 2022. The
increase is mainly attributable to an increase in the Company's VAT receivable
which rose by US$3.7 m to US$31.3 m as expected with Singida operating
expenses increasing the value of VAT return submissions. During the Period
US$5.7 m of VAT receivables were offset against the Company's 2022 corporation
tax liability in Tanzania with US$1.1 m being received as a cash refund.
US$10.6 m of VAT receivables are subject to verification audit by the TRA
before being available for further offsets and are treated as a current asset.
The remaining VAT balance of US$20.7 m relates to the Company's input VAT
refund application for the period from July 2017 to June 2020 for which the
Company is pursuing a settlement to recover; this is treated as a non-current
asset.
Cash Flow
Gold production increased by 55% in H1 2023 compared with H1 2022 and gold
sales increased by 64% to 45,402 oz (H1 2022: 27,751 oz). This was driven by
new sales from Singida of 8,702 oz (H1 2022: Nil) and an increase in sales
from NLGM of 36,699 oz (H1 2022: 27,751 oz) from better grades and equipment
availability. Operating cashflow also benefited from a 4% increase in the
realised sales price during H1 2023 to $1,938 /oz (H1 2022: $1,870 /oz.)
Capital expenditure amounted to US$15.2 m, including US$3.5 m of capitalised
mine development costs (H1 2022: US$5.5 m) and US$9.5 m at Singida (H1 2022:
U$10.9 m).
Cash generated from operations before working capital amounted to US$32.1 m in
the Period. Working capital increased by US$6.5 m, accounted for by an
increase in inventories of US$0.5 m, an increase in trade and other
receivables of US$10.1 m and an increase in trade and other payables of US$4.1
m.
The Company's unrestricted cash balance at 30 June 2023 was US$15.0 m, up from
US$3.8 m at 31 December 2022. Net debt at the end of the Period amounted to
US$8.6 m (FY 2022: US$13.6 m).
Singida
Singida Gold Mine announced first gold pour on 30 March 2023 following
completion of the plant construction as planned. Singida is Tanzania's first
new medium-scale gold mine in a decade and a significant addition to the
Shanta portfolio. It will add 45%-50% to the Group's annual production
profile, accelerating Shanta's growth towards becoming a 100 koz per annum
gold producer.
On 1 June 2023, commercial production was declared following an efficient ramp
up from first gold pour and a successful testing and commissioning phase.
Commercial production was declared based on achieving 30 consecutive days of
mill throughput exceeding 95% of nominal nameplate capacity of 1,000 tonnes
per day ("tpd"), overall plant utilisation and gold recovery exceeding 91%,
and plant availability above 90%.
Following this, six months' worth of feed already stockpiled was processed
with 82,674 tonnes milled. The plant has performed well with good availability
and utilisation contributing to strong production during the Period with
10,116 oz produced, an increase of 15% compared to budget. Improved
recoveries, gold purity in ore, and percentage recovery from gravity also
contributed to higher-than-expected production.
Singida is an underexplored asset, and the Company is now focusing on
unlocking the nearly 75% of resource not included in the reserve-based mine
plan through a targeted exploration programme that will convert resources, add
reserves, outline new targets and demonstrate further potential of the Singida
Project.
West Kenya Project
Following a successful FY22 exploration and drilling campaign the Group
announced a Resource Update at the West Kenya Project to 1.76 Moz grading 5.55
g/t Au. This represents an increase of 49% from 1.18 Moz since Shanta
commenced drilling at the start of 2021. The current resources are expected to
increase to over 3 Moz over time.
Exploration and infill drilling recommenced during H1 2023, with 26,000 meters
planned across 80 holes within a total 2023 budget of up to US$10 m,
consistent with previous years. This will target conversion of ounces to the
Indicated category and resource extensions at the Isulu and Ramula deposits.
Sterilisation drilling on the potential mining infrastructure is also underway
to further define the extent of the mineral resource.
Technical study work has commenced and is accelerating with third party
consultants engaged to progress long lead areas including environmental and
social baseline studies as part of the feasibility study project. Workstreams
towards mining licence application and permitting are also now underway.
CEO Succession
In April 2023, following the successful construction and completion of the
Singida Gold Mine, Shanta announced that Eric Zurrin, Chief Executive Officer,
had informed the Board of his decision to step down from his role after six
years with the Company. A formal search process is advanced with the Board
currently in discussions with short-listed candidates. Mr Zurrin commits to
ensuring a smooth transition to new leadership for Shanta Gold, who will
inherit a transformed multi-asset gold producer with financial flexibility and
a strong management team in place to support the Company's ongoing stability.
Interim Dividend
Following consideration of the Company's financial condition and outlook, the
Board has declared an interim dividend of 0.10 pence per share (H1 2022: 0.10
pence) expected to be paid on 27 November 2023. This interim dividend, which
will be paid gross, is expected to align with the following proposed
timetable:
Ex-div date: 2
November 2023
Record date: 3 November
2023
Payment
date: 27
November 2023
2023 Production and Cost Guidance
Management reiterates production and cost guidance for NLGM and Singida:
Production Cost (AISC)
(Koz) US$ / oz
NLGM FY 23 66 - 72 1,200 - 1,300
H1 23 Actual 34.7 1,293
Singida FY 23(1) 24 - 26 1,300 - 1,400
H1 23 Actual 10.1 825
Group FY 23(1) 90 - 98 -
H1 23 Actual(2) 44.8 -
Note 1 - Singida: for the 9-month period April-December 2023
Note 2 - Reflects actual Singida production since 30 March 2023
Country Overview
In September 2022, the Government of Tanzania revoked the 2020 Mining (State
Participation) Regulations and reissued new regulations governing Section 10
of the Mining Act that had been amended in 2017. In April 2023, the Government
of Tanzania signed agreements worth approximately US$650 m with various
international mining companies to enable foreign investment. As disclosed by
the Company in October 2022, discussions between the Ministry of Minerals and
Shanta were expected to take place in 2023. The Company held an introductory
meeting in April 2023. No further discussions have taken place since then.
Post Period
An Interim dividend of 0.10 pence per share (H1 2022: 0.10 pence) is declared
by the Board and expected to be paid on 27 November 2023. This will be the
sixth consecutive Period with a dividend paid totalling cash payments of
US$8.0 m since 2021.
SHANTA GOLD LIMITED
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2023
6 months 6 months Year
ended ended ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Note Unaudited Unaudited Audited
Revenue 88,349 51,908 114,055
Loss on non-hedge derivatives (1,163) - (81)
Depreciation (9,076) (7,920) (16,725)
Other cost of sales (49,417) (33,990) (71,844)
Cost of sales (58,493) (41,910) (88,569)
Gross profit 28,693 9,998 25,405
Administration expenses (3,472) (5,980) (12,000)
Exploration and evaluation costs (1,466) (4,039) (7,370)
Operating profit/(loss) 23,755 (21) 6,035
Finance income 3 10 425
Finance expense (1,032) (863) (3,535)
Profit / (loss) before taxation 22,726 (874) 2,925
Taxation 3 (10,057) (2,239) (5,224)
Profit / (loss) after taxation 12,669 (3,113) (2,299)
Other comprehensive loss:
Exchange differences on translating subsidiary which can subsequently be (497) - -
reclassified to profit or loss
Total comprehensive profit / (loss) attributable to equity shareholders of 12,172 (3,113) (2,299)
parent company
Basic earnings / (loss) per share (US$ cents) 4 1.206 (0.297) (0.220)
Diluted earnings / (loss) per share (US$ cents) 4 1.206 (0.297) (0.220)
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 19 September 2023.
SHANTA GOLD LIMITED
Consolidated Statement of Financial Position
As at period ended 30 June 2023
30-Jun 30-Jun 31-Dec
2023 2022 2022
US$'000 US$'000 US$'000
Note Unaudited Unaudited Audited
Non-current assets
Intangible assets 43,343 43,343 43,343
Property, Plant and Equipment 6 125,424 97,968 115,731
Right of use assets 4,497 2,212 2,740
Other receivables 20,762 24,111 22,064
Total non-current assets 194,026 167,634 183,878
Current assets
Inventories 36,716 31,472 36,207
Trade and other receivables 16,155 6,805 10,495
Cash and cash equivalents 14,885 7,592 3,828
Total current assets 67,756 45,869 50,530
Total assets 261,782 213,503 234,408
Capital and reserves
Share capital and premium 211,949 211,540 211,540
Share option reserve - 148 -
Translation reserve (47) 450 450
Retained deficit (47,354) (58,469) (60,023)
Total equity 164,548 153,669 151,967
Non-Current liabilities
Loans and borrowings 5 17,427 2,693 19,316
Provision for decommissioning 14,406 8,189 12,266
Provision for deferred taxation 14,544 11,984 11,180
Total non-current liabilities 46,377 22,866 42,762
Current liabilities
Trade and other payables 30,439 26,113 26,208
Loans and borrowings 5 15,175 6,377 8,126
Derivative financial liability - - 81
Income tax payable 5,243 4,478 5,264
Total current liabilities 50,857 36,968 39,679
Total liabilities 97,234 59,834 82,441
Total equity and liabilities 261,782 213,503 234,408
The notes that follow in this report form part of these financial statements.
The financial statements were authorised and approved for issue by the Board
of Directors and authorised for issue on 19 September 2023.
SHANTA GOLD LIMITED
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2023
Share Capital Share Premium Share Option Reserve Translation Reserve Retained Deficit Total Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2023 150 211,390 - 450 (60,023) 151,967
Profit for the Period - - - - 12,669 12,669
Share awards 1 408 - - - 409
Other comprehensive loss - - - (497) - (497)
At 30 June 2023 (Unaudited) 151 211,798 - (47) (47,354) 164,548
At 1 January 2022 150 211,390 148 450 (55,356) 156,782
Loss for the Period - - - - (3,113) (3,113)
Share awards - - - - - -
Lapsed options - - - - - -
At 30 June 2022 (Unaudited) 150 211,390 148 450 (58,469) 153,669
At 1 January 2022 150 211,390 148 450 (55,356) 156,782
Loss for the Year - - - - (2,299) (2,299)
Share awards - - - - - -
Lapsed options - - (148) - 148 -
Dividend payments - - - - (2,516) (2,516)
At 31 December 2022 (Audited) 150 211,390 - 450 (60,023) 151,967
The notes that follow in this report form part of these financial statements.
The financial statements were authorised and approved for issue by the Board
of Directors and authorised for issue on 19 September 2023.
SHANTA GOLD LIMITED
Consolidated Statement of Cash flows
for the six months ended 30 June 2023
6 months 6 months Year
ended ended ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Note Unaudited Unaudited Audited
Net cash flows from operating activities 8 24,503 7,315 11,753
Investing activities
Purchase of plant and equipment (86) - (42)
Purchase of right of use assets - (203) -
Purchase of assets under construction (11,558) (10,928) (29,529)
Capitalised mine development expenditure (3,497) (4,889) (8,387)
Net cash flows used in investing activities (15,141) (16,020) (37,958)
Financing activities
Loans repaid (5,334) (1,182) (6,003)
Principal paid on lease liabilities (397) - (1,301)
Interest paid (1,242) (193) (1,361)
Dividends paid - - (2,516)
Loans received (net of loan arrangement fees) 8,668 4,458 28,000
Net cash flows received from financing activities 1,695 3,083 16,819
Net increase / (decrease) in cash and cash equivalents 11,057 (5,622) (9,386)
Cash and cash equivalents at beginning of Period / year 3,828 13,214 13,214
Cash and cash equivalents at end of Period / year 14,885 7,592 3,828
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 19 September 2023.
SHANTA GOLD LIMITED
Notes to the Consolidated Financial
Information
for the six months ended 30 June 2023
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 19 September 2023.
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
2023.
The Directors have performed an assessment of whether the Group would be able
to continue as a going concern until at least December 2024. In their
assessment, the Group has taken into account its financial position, expected
future trading performance, its debt facilities, future debt servicing
requirements, its working capital and capital expenditure commitments and
forecasts. 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 until at least December 2024. Key assumptions
underpinning this forecast included consensus analyst gold prices and
production volumes in line with annual guidance.
At 30 June 2023 the Group had an unrestricted cash balance of US$15.0 million
and available liquidity of US$6.0 million. The Group has sufficient operating
cashflows to continue to operate for the foreseeable future, including meeting
contractual debt repayments until at least December 2024.
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 2023 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 19 September 2023. The consolidated interim
financial information for the Period 1 January 2023 to 30 June 2023 are
unaudited and incorporate unaudited comparative figures for the interim Period
1 January 2022 to 30 June 2022 and the audited comparative figures for the
year to 31 December 2022. 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 2022 Annual Report.
The half year financial information for the six months ended 30 June 2023 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 2022, 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 2023 (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 2023, and will be adopted in the
2023 annual financial statements.
The following new standards and interpretations became effective on 1 January
2023. None of these amendments are considered to have had a material effect in
the Period, as they are either not relevant to the Group's activities or
require accounting which is consistent with the Group's current accounting
policies.
· IFRS 17 Insurance Contracts;
· Disclosure of Accounting Policies (Amendments to IAS 1
Presentation of Financial Statements and IFRS Practice Statement 2);
· Definition of Accounting Estimates (Amendments to IAS 8
Accounting policies, Changes in Accounting Estimates and Errors);
· Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12 Income Taxes); and,
· International Tax Reform - Pillar Two Model Rules (Amendments to
IAS 12 Income Taxes).
2.1 Critical accounting estimates, assumptions and judgements:
a) Commencement of Commercial Production
Commercial production is deemed to have commenced when a mining interest is
capable of operating at levels intended by management. This is achieved when
management determines that the operational commissioning of a major mine and
plant components is complete, operating results are being achieved
consistently for a period of time and that there are indications that these
operating results will continue.
The Group determines commencement of commercial production based on the
following factors:
· All major capital expenditures to bring the mine to the condition
necessary for it to be capable of operating in the manner intended by
management have been completed;
· Key major necessary permits in place;
· Kery personnel required to maintain commercial production in
place;
· First gold shipment achieved;
· The completion of a reasonable period of testing of the mine
plant and equipment;
· The mine or mill has reached a pre-determined percentage of
design capacity; and,
· The ability to sustain ongoing production of ore.
The list is not exhaustive and each specific circumstance is taken into
consideration before making the decision. Based on a review of the above
factors, management deemed that Singida commenced commercial production on 1
June 2023.
All other 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
2022.
3 Taxation
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.
SHANTA GOLD LIMITED
Notes to the Consolidated Financial
Information
for the six months ended 30 June 2023 (continued)
Tax charge for the Period relates to:
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Current tax charge 6,693 2,635 6,425
Deferred tax charge 3,364 (397) (1,201)
Net charge 10,057 2,238 5,224
The tax charge for the Period can be reconciled to the profit / (loss) before
taxation per the statement of comprehensive income as follows:
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Profit / (Loss) before taxation 22,726 (874) 2,925
Tax at the standard tax rate
Tanzanian Corporation tax at 30% 6,818 (265) 878
Different tax rates applied in overseas jurisdictions 527 575 963
Permanent adjustments 2,329 (109) 5,405
Unrecognised taxable losses in subsidiaries 983 1,960 5,724
Taxable losses utilized not previously recognized (447) - -
Adjustment in respect of prior periods 81 77 77
Capital allowances in excess of depreciation (3,598) - (6,903)
Other movements - - (920)
Tax charge 6,693 2,238 5,224
4 Earnings / (loss) per share
Basic earnings / (loss) per share is calculated by dividing the profit
attributable to the ordinary shareholders by the weighted average number of
ordinary shares outstanding during the Period/year.
At 30 June 2023 and at 31 December 2022 there were no share incentives
outstanding that could potentially dilute basic earnings / (loss) per share in
the future.
SHANTA GOLD LIMITED
Notes to the Consolidated Financial
Information
for the six months ended 30 June 2023 (continued)
Unaudited Unaudited Audited
30-Jun-23 30-Jun-22 31-Dec-22
Profit Weighted avg no of shares Per share amount Loss Weighted avg no of shares Per share amount Loss Weighted avg no of shares Per share amount
US$'000 ('000) (Cents) US$'000 ('000) (Cents) US$'000 ('000) (Cents)
Basic earnings/(loss) 12,669 1,050,741 1.206 (3,113) 1,047,886 (0.297) (2,299) 1,047,886 (0.220)
Diluted earnings/(loss) 12,669 1,050,741 1.206 (3,113) 1,047,886 (0.297) (2,299) 1,047,886 (0.220)
5 Loans and borrowings
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Amounts payable within one year
Silver stream ((1)) 1,226 1,190 1,347
Loans payable to Standard Bank ((2)) 6,667 277 3,114
Loan payable to Exim Bank((3)) 333 - -
Stanbic revolving credit facility payable((4)) 6,000 4,000 3,000
Lease Liabilities 949 910 665
15,175 6,377 8,126
Amounts payable after one year
Silver stream ((1)) 1,710 2,093 2,045
Loans payable to Standard Bank ((2)) 13,333 - 16,580
Lease liabilities 2,384 600 691
17,427 2,693 19,316
(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 2022 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 Standard Bank
In July 2022 the Company entered into a long term facility agreement with
Standard Bank Tanzania. The facility is for a principal amount of US$20
million and has a term of 4 years at an interest rate of SOFR plus 5.25%.
Repayment is in 12 equal capital repayments quarterly from September 2023. The
loan is secured against the assets of the Company.
(3) Loans Payable to Exim Bank
During the Period, the Company entered into an Insurance Premium Finance
Arrangement with Exim Bank (Tanzania) Limited ("EXIM"). The loan has a
variable interest at 6.00% per annum and is repayable in 10 monthly
instalments, being repayable by the start of 2024.
(4) Stanbic Revolving Credit Facility
The Company entered into a revolving loan facility with Stanbic Bank in
Tanzania to fund short term working capital. The facility is for US$ 10
million of which US$ 6 million is 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 2023 (continued)
6 Property, plant and equipment
US$000 Gold Processing Plant Mining Assets Assets Under Construction(1) Mining and other equipment Decom-missioing Asset Deferred Stripping Asset Total
Cost
At 1 January 2023 44,996 156,017 52,375 42,517 8,489 36,219 340,613
Additions - 1,907 12,509 86 2,267 1,590 18,359
Asset Transfer 37,515 21,055 (62,027) 1,489 - 1,968 -
At 30 June 2023 (Unaudited) 82,511 178,979 2,857 44,092 10,756 39,777 358,972
Accumulated Depreciation
At 1 January 2023 36,470 118,138 - 30,434 3,963 35,877 224,882
Charge for the Period 1,153 5,706 - 1,408 241 158 8,666
At 30 June 2023 (Unaudited) 37,623 123,844 - 31,842 4,204 36,035 233,548
Net Book Value
At 30 June 2023 (Unaudited) 44,888 55,135 2,857 12,250 6,552 3,742 125,424
Cost
At 1 January 2022 44,996 144,642 28,974 38,936 4,581 36,219 298,348
Additions - 4,375 11,009 73 - 514 15,971
Asset Transfers - 2,718 (4,501) 1,783 - - -
At 30 June 2022 (Unaudited) 44,996 151,735 35,482 40,792 4,581 36,733 314,319
Accumulated Depreciation
At 1 January 2022 34,115 108,790 - 26,278 3,906 35,603 208,692
Charge for the Period 1,176 4,718 - 1,556 - 209 7,659
At 30 June 2022 (Unaudited) 35,291 113,508 - 27,834 3,906 35,812 216,351
SHANTA GOLD LIMITED
Notes to the Consolidated Financial
Information
for the six months ended 30 June 2023 (continued)
Net Book Value
At 30 June 2022 (Unaudited) 9,705 38,227 35,482 12,958 675 921 97,968
Cost
At 1 January 2022 44,996 144,642 28,974 38,936 4,581 36,219 298,348
Additions - 8,387 29,529 441 3,908 - 42,265
Asset Transfer - 2,988 (6,128) 3,140 - - -
At 31 December 2022 (Audited) 44,996 156,017 52,375 42,517 8,489 36,219 340,613
Accumulated Depreciation
At 1 January 2022 34,115 108,790 - 26,278 3,906 35,603 208,692
Charge for the Period 2,355 9,348 - 4,156 57 274 16,190
At 31 December 2022 (Audited) 36,470 118,138 - 30,434 3,963 35,877 224,882
Net Book Value
At 31 December 2022 (Audited) 8,526 37,879 52,375 12,083 4,526 342 115,731
(1) Assets under construction primarily relate to capitalised costs at the
Singida Project and ongoing phases of underground development at New Luika.
On 1 June 2023 the Group declared commercial production at the Singida Project
using multiple criteria. No borrowing costs were capitalised subsequent to 1
June 2023.
SHANTA GOLD LIMITED
Notes to the Consolidated Financial Information
for the six months ended 30 June 2023 (continued)
7 Segment Information
The Group operates in two principal countries, Tanzania (New Luika and Singida
gold mines) and Kenya. The following table provides the Group's results by
operating segment in the way information is provided to and used by the
Company's chief operating decision maker, which is the CEO, to make decisions
about the allocation of resources to the segments and assess their
performance.
The Group considers each of its operational mines and expenditure at the West
Kenya Project a separate segment. Tanzania exploration, central
administration, and corporate costs are aggregated and presented together as
part of the "other" segment on the basis of them sharing similar economic
characteristics.
Six months ended 30 June 2023 (Unaudited)
US$'000 New Luika Gold Mine Singida Gold Mine West Kenya Project Other Total
Revenue
Gold revenue 71,546 16,803 - - 88,349
Cost of Sales
Operating expenses (36,152) (6,674) (1,309) (4,611) (48,746)
Depreciation (8,054) (964) (58) (181) (9,257)
Royalties (5,371) (1,220) - - (6,591)
Earnings / (loss) from mining operations 21,969 7,945 (1,367) (4,792) 23,755
Six months ended 30 June 2022 (Unaudited)
US$'000 New Luika Gold Mine Singida Gold Mine West Kenya Project Other Total
Revenue
Gold revenue 51,908 - - - 51,908
Cost of Sales
Operating expenses (30,074) - (5,841) (3,969) (39,884)
Depreciation and depletion (7,920) - (4) (205) (8,129)
Royalties (3,916) - - - (3,916)
Earnings / (loss) from mining operations 9,998 - (5,845) (4,174) (21)
Twelve months ended 31 December 2022
US$'000 New Luika Gold Mine Singida Gold Mine West Kenya Project Other Total
Revenue
Gold revenue 114,055 - - - 114,055
Cost of Sales
Operating expenses (63,189) - (8,572) (10,482) (82,243)
Depreciation and depletion (16,725) - (79) (318) (17,122)
Royalties (8,655) - - - (8,655)
Earnings / (loss) from mining operations 25,486 - (8,651) (10,800) 6,035
Segment revenue reported represents revenue generated from external customers.
There were no inter-segment sales during the periods ended 30 June 2023 or 30
June 2022.
8 Net Cash flows from Operating activities
30-Jun 30-Jun 31-Dec
2023 2022 2022
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Profit / (loss) before tax 22,726 (874) 2,925
Adjustments for:
Depreciation / depletion of assets 8,666 7,658 16,190
Amortisation of right of use assets 591 305 535
Unrealised exchange losses (497) (18) 1
Share based payments 409 - -
Fair value adjustments - (94) -
Non-cash settlement of Silver Stream obligation (846) (496) (1,221)
Finance income (3) (10) (425)
Finance expense 1,032 863 3,535
Increase in provisions - - (145)
Operating cash inflow before movement in working capital 32,078 7,334 21,395
Movements in working capital:
(Increase) in inventories (508) (4,238) (8,973)
(Increase) in receivables (8,995) (1,170) (8,431)
Increase in payables 3,923 5,962 8,699
26,498 7,888 12,690
Taxation paid (1,995) (573) (938)
Interest received - - 1
Net cash flow from operating activities 24,503 7,315 11,753
During the Period US$4.6 m of VAT receivables were offset against the
Company's brought forward corporation tax liability in Tanzania
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 2023 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and 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 2023 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 accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
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 with the 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
19(th) September 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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