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Shanta Gold – “exploration update” (and more), Buy

By HotStockRockets

26 May 2023 14:25

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Shanta Gold (SHG) has issued an exploration update for its assets in Tanzania and Kenya with its Singida gold mine achieving production ramp-up objectives.

With steady state throughput and gold production at Singida in Tanzania, the company emphasises that “34,000 meters of drilling has now recommenced at New Luika Gold Mine and West Kenya Project”. For New Luika in Tanzania, there’s a planned 8,000 metres of drilling across 51 holes at surface and underground deposits. At West Kenya there’s planned up to 26,000 metres drilling across 80 holes targeting both resource category upgrades and resource extensions. There’s also exploration drilling at Singida planned for the third quarter.

There can be confidence including with the company’s drilling track-record at the projects and with, for example, at Singida only 26% of total resource included in the reserve-based mine plan and at West Kenya already a resource of 1.76Moz grading 5.55g/t having been defined and consultants now being engaged to accelerate technical studies.

The company notes that it has now completed two gold shipments from Singida and the mine is free cash flow positive – and we’ve previously noted that, at even a $400 per ounce margin, a now heading towards 100,000 ounces of annual production equates to $40 million. With also the clear potential of West Kenya and now “expect to announce drilling assay results beginning in July and updates to our reserves and resource estimates throughout Q3 and Q4”, we continue to see clear catalysts for a return to above a 16p share price here. At up to the current 11.5p, approaching £121 million, currently approx. $150 million, market cap, following our 10.5p offer price November tip, Buy.

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