Development of the Illunga underground decline at Aim-listed Shanta Gold’s New Luika gold mine, in Tanzania, has started three months ahead of schedule, with first ore expected in mid-2019.

"We will shortly have three active sources of high-grade ore following the start of underground development at Ilunga,” CEO Eric Zurrin said on Monday.

He added that, with operations performing well at New Luika, and following the cost cutting initiatives implemented since September 2017, the company expects the balance sheet to continue deleveraging.

The company further expects net yearly savings of $1-million from January, after deciding to move to owner-operation of the heavy fuel oil power plant at the New Luika mine.

In addition, commissioning of a third pre-leach tank will start on September 12 and targets a 1.5% to 2% increase in gold recoveries to around 93%.

Meanwhile, the company’s Phase 2 exploration programme at the Singida project, also in Tanzania, will begin in September, with detailed project economics anticipated to be announced in the fourth quarter.

Phase 1 of Singida’s exploration entailed 1 600 m of reverse circulation drilling at two of the seven key targets in the Singida mining licence area. The measured and indicated resources had increased to almost 400 000 oz of gold grading 2.08 g/t.

The Singida project is a direct beneficiary of a Tanzanian Rural Energy Authority (REA) programme and will be connected to the central government’s power grid, which is expected to pass within 500 m of the proposed location of the project site.

Construction of the REA power supply line is expected to be completed by the end of this year, funded by the government and external donors.

Further, project capital funding is being targeted from external third parties at the Singida asset level.

“With mining flexibility providing operational stability, Shanta is renewing its focus on exploration. Over the next two years Shanta is targeting high-priority exploration targets on its mining licences which include down dip extensions at Shanta's high-grade Bauhinia Creek and Ilunga deposits," commented Zurrin.