Shanta Gold kept as ‘buy’ as grades tipped to improve

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Shanta Gold Ltd is close to working through the low-grade zone at its New Luika mine in Tanzania, according to broker Liberum, which will enable production and profits to rise from now on.


The East African-focused gold producer today reported flat third quarter production.


Much of this was down to a weak grade of gold (2.2g/t) at the New Luika mill, despite improved throughput at the site.


Liberum believe that the site will soon be able to pay for itself once the grade improves, which it expects to shortly as the fault zone has now been worked through.


Shanta Gold reports steady gold output and exploration success in third quarter


Guidance was set and maintained this quarter to produce 60-65koz of gold for the year (down on the previous quarter target of 80koz).


That would require grades of 2.67-3.45g/t in the final quarter, if throughput stayed consistent at current levels.


Grades are expected to return to levels of close to 3.0g/t.


Looking forward, as grades begin to normalise in 2022, Shanta Gold are hopeful in lifting production to 75-80koz.


That should bring AISC (all in sustaining cost, a metric used by mining companies to report on the overall cost of running a mine) down from US$1,300/oz to $US1,000/oz.


Liberum, Shanta’s house broker, kept its target price at 36p and maintained its ‘buy’ recommendation.


Shanta Golds share price is down 5.27% as of Thursday afternoon, at GBP13.03.

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