JOHANNESBURG (miningweekly.com) – The volatile gold price environment, the early stage production profile of Aim-listed Shanta Gold and its planned upcoming capital spend to boost production, has prompted the company to commit to several forward-sale contracts for part of its expected 2013 production.

The forward-sale contracts would amount to 30 000 oz of gold during the period up to December 2013, of which 6 000 oz would be dispatched from March and April’s production.

These sales amounted to 43% of the forecast yearly production and were secured at an average price of $1 429/oz.

“In principle, Shanta does not favour hedging or forward sales unless, as in this particular situation, it is put in place to provide stability during an important period in the company's development. We continue to put the necessary building blocks in place to ensure the stability and growth of this exciting asset," commented CEO Mike Houston.

This came as the East Africa-focused company recently announced its five-year production plan, which it believed was enhanced by an exploration opportunity through the Lupa Goldfields joint venture transaction, which saw Shanta securing a major area of the highly prospective Lupa goldfields.

The exploration programme would also target the ongoing evaluation of current orebodies at the New Luika gold mine, which was aimed at extending the life of the high-grade Bauhinia Creek pit beyond the current published opencast production into a possible underground mining opportunity.

Development at New Luika would include a new crushing circuit, upgrading the gold room, completing the village and security improvements.

Shanta sold 10 192 oz of gold in the first quarter of the year, generating $16.6-million in revenue from December and first-quarter gold output.

The company had cash and cash equivalents of $21-million and anticipated a capital spend of $7-million, primarily in the second half of the year, to achieve its exploration goals.