JOHANNESBURG (miningweekly.com) – Following a business review in the wake of legislative changes in Tanzania, Aim-listed Shanta Gold is optimistic of emerging with a leaner cost structure, an enhanced focus on increased cash generation, greater internal Tanzanian leadership and reduced financial risk.
With new initiatives in play, the East Africa-focused gold producer, developer and explorer will ramp up the New Luika gold mine’s underground production in 2017/18; reduce run-rate costs by an estimated $5-million a year; internalise core competencies; realign management incentives and refocus its exploration strategy going forward.
“I am pleased to announce that following the company's business review, Shanta is now well-structured to deliver long-term value for all its shareholders. The new value enhancement and cost-saving initiatives will create a stable platform from which the company can prosper and grow sustainably under the new Tanzanian mining legislation,” explained Shanta CEO Eric Zurrin.
The group is also re-evaluating the development of the Singida project, including the financing, with a 2017 review by an independent consultant completed and a development decision approaching.
All of this is expected to increase Shanta’s cash generation, deliver a leaner cost structure, diversify cash flow and deliver on its longer-term objective of dividends and return on capital.
The company has one low-cost producing mine, with a seven-year mine life and 80 000 oz to 85 000 oz a year production from a 1.3-million-ounce resource.
In the future, Shanta will boast two low-cost producing mines with a mine life of more than ten years and more than 100 000 oz a year output from a two-million-ounce resource.
MANAGEMENT CHANGES
Meanwhile, the group made changes to the senior management team, with the promotions of Scott Yelland to COO and Honest Mrema to New Luika GM, as well as the appointment of Luke Leslie as interim CFO.
In addition, senior management unanimously endorsed an average 15% reduction in gross cash salaries, which is in addition to a shares for cash fee sacrifice announced in June.
The executive committee, which now includes a higher representation of senior Tanzanian management with strong government relations, had agreed to discretionary pay in the form of Shanta shares to increase alignment with shareholders, the company noted.