JOHANNESBURG (miningweekly.com) – East Africa-focused gold producer Shanta Gold expects to recover around 430 000 oz of gold at an average blended grade of 6.3 g/t at its New Luika gold mine over the next five years.

This was an increase from previous figures indicating the recovery of 225 000 oz over the first three years and followed the upgrading of the Aim-listed explorer’s two-stage crushing circuit to a three-stage circuit in early January.

The plant upgrade boosted throughput to 960 t/d in the first quarter of 2013 from an average of 610 t/d between August and December 2012. 

The company said in an operational update on Monday that it would further increase crushing capacity in the second half of the year to an estimated 1 200 t/d throughput and was planning a longer term upgrade with expansion potential by the end of 2013.

“Over the last quarter, we have made good progress at New Luika. We have spent a considerable amount of time understanding the orebody, pit design and the drivers of the processing plant and have carefully planned our gold production over the next five years,” commented CEO Mike Houston.

The plant upgrade further boosted first-quarter production to 11 888 oz, from 5 748 oz of gold in the fourth quarter of 2012.

Continued increases in throughput were expected through the removal of additional plant bottlenecks, while operating improvements at the mills, carbon-in-leach tanks and gold room had resulted in a steady upsurge in processed volumes.

“We reiterate that our 2013 production target of 70 000 oz is achievable if the further crusher capacity and other planned plant improvements are successfully implemented during the year,” Houston said, adding that, at the current monthly run rate, 63 000 oz of gold would be produced for the full year.

Meanwhile, cash costs were currently in the range of between $800/oz and $850/oz, but were expected to ease to between $675/oz and $775/oz as a review of the current cost structure was undertaken and targeted improvements achieved. 

Specific areas of focus included the restructuring of major service and supply agreements and the assessment of alternative sources of power.

Consolidation
To further drive its exploration strategy, Shanta has acquired Boulder Investments, which owned 100% of Shield Resources and the prospective Lupa licences, which covered a significant portion of the exploration ground surrounding New Luika.

These included active licences of 1 313 km² and a further 1 237 km² of licences under application, with several priority targets identified by the company for further investigation.

The consolidation of the prospective exploration ground secured 100% control and ownership over the prospective Lupa licences.

Shanta paid $2.4-million at closing, with an additional $2.4-million deferred over 24 months and $3.1-million issued as a promissory note due on April 12, 2017, both bearing interest at 2.6%. 

Meanwhile, over the period, the company terminated an exploration joint venture with Great Basin Gold entered into in June 2011, which included a conditional payment obligation on Shanta Gold subject to exploration results.

The termination eliminated all potential dilution to Shanta Gold, whereby it would have been obliged to issue shares in the company to the value of $70/oz for measured and indicated ounces and $20/oz for inferred ounces for any gold resource defined above 500 000 oz and all mined gold ounces.

This transaction also eliminated the company's remaining minimum exploration spend of over $10-million in the next 20 months to earn its 80% interest in Shield. 

Shanta Gold appointed Anthony Durrant as nonexecutive chairperson from May 20, following the departure of Walton Imrie.