Name of the Project
New Luika gold mine (NLGM).

Location
The project is located in the Songwe district, in south-west Tanzania.

Client
Shanta Gold.

Project Description
NLGM started production in August 2012 and is expected to produce an average of 85 200 oz from 2017 to 2020. The company is in the process of moving from openpit mining to underground mining. 

First stope ore was delivered on schedule in May. The mine comprises several small to medium-sized high-grade deposits in close proximity to one another. Bauhinia Creek and Luika are the two key gold deposits currently being developed to provide high-grade ore from underground operations. Shanta’s other satellite deposits include Jamhuri, Ilunga, Shamba and Elizabeth Hill. All these deposits are open at depth and on strike and exploration continues.

Shanta released a revised mine plan (RMP) for the project in March, which increased its low-cost reserves and highlighted the long-life potential at NLGM.

The RMP envisages average gold production of 85 000 oz at an average all-in sustaining cost of $736/oz for the next four years (from 2017 to 2020). This is before the incorporation of the resources of 9.47-million tonnes at 2.24 g/t for 683 000 oz that are situated outside the RMP, as well as the recently defined maiden resource of four-million tonnes at 1.1 g/t for 140 894 oz at the Nkuluwisi prospect and the Saza-Makongolosi project (SMP) resources that will be acquired from Helio in due course.

The strategy for NLGM is to maximise value and mine life through the inclusion of additional resources within and around the mining licence. For the purposes of the plan, all reserves incorporated in the plan at this stage are within the existing mining licence areas.

From 2017, NLGM will be a blend of underground mining of high-grade ores and smaller-scale surface mining of lower-grade resources. The revised mine plan provides for mining extraction of 3.64-million tonnes for the production of 515 500 contained ounces from January 2017 to 2023, with 71 000 oz (14%) from openpit and 444 500 oz (86%) from underground. The balance of process feed ore will come from stockpiles, gravels and mineralised waste, totalling 11 500 contained ounces.

Underground mining will take place at Bauhinia Creek, Luika and Ilunga to depths below surface of 350 m, 315 m and 250 m respectively. Mining methods are predominantly longhole openstoping, with backfill where warranted.

Surface mining will take place at Ilunga, Jamhuri, Shamba and Elizabeth Hill. At this stage, the Black Tree Hill deposit is not included in the plan.

Under the plan, the process plant achieves full capacity use to 2022. It is expected that additional resources from the existing portfolio of opportunities within the mining licence and the company’s surrounding exploration licences will provide further mine life and optionality for NLGM. A separate tailings recovery project will produce a further 14 600 oz.

Gold production from 2017 to 2020 will average 85 200 oz/y, compared with 84 000 oz/y in the BCMP, with opportunities to optimise future years with additional resources and reserves as they are defined.

The RMP estimates a seven-year life-of-mine. The addition of the Ilunga underground reserve has added significantly to the RMP. The Ilunga underground feasibility study has been completed for the extraction of 660 500 t at a grade of 5.6 g/t for 118 000 oz contained. The Ilunga underground will use longhole openstope mining methods and the existing mining fleet acquired for Bauhinia Creek and Luika underground.
Ilunga has a projected mine life of five years, with a yearly production of 21 500 oz.

Jobs to Be Created
Not stated.

Net Present Value/Internal Rate of Return
The project has a net present value (NPV), at an 8% discount rate, of $123-million.

The tailings recovery project has a standalone project net present value, at an 8% discount rate, of $2.8-million and a pretax internal rate of return of 39%. The Ilunga underground project has an NPV, at an 8% discount rate, of $41.9-million, with a pretax internal rate of return of 129%, with a payback of two years.

Value
The RMP estimates total capital expenditure for the project life at $68-million and preproduction capital for the Ilunga underground project at $8.5-million, including contingency, to be funded from cash flow.

Duration
The first underground ore was produced from the first stope in the Bauhinia Creek deposit in May. Throughout this year, New Luika will transition from an exclusively surface mining operation to one that is predominantly underground.

Latest Developments
In June, Shanta announced that it had entered into an arm’s-length arrangement to acquire all the issued and outstanding common shares of Helio Resource Corporation by way of a statutory plan of arrangement, subject to Helio shareholder and British Columbia Supreme Court approval. Shanta will acquire Helio’s SMP, which is adjacent to Shanta’s NLGM. The SMP openpits have an indicated gold resource of 332 000 oz at 1.8 g/t and an inferred resource of 17 000 oz at 1.6 g/t. Underground resources include an indicated resource of 258 000 oz at 4.9 g/t and an inferred resource of 27 000 oz at 3.8 g/t.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Shanta Gold, tel +255 22 2601 829, fax +255 22 2112 341 or email Info@shantagold.com.