JOHANNESBURG (miningweekly.com) – Aim-listed Shanta Gold’s New Luika gold mine produced 19 097 oz in the quarter ended December 31, significantly lower than the 22 721 oz produced in the previous quarter, but still in line with the company’s guidance.

Gold production for the year was 84 028 oz, ahead of the guidance of 80 000 oz to 83 000 oz and 31% above the comparable period’s output of 64 054 oz, reflecting a combination of a 48% increase in ore milled and 16% reduction in ore grade.

The East Africa-focused gold production and exploration company said this reflected the impact of the pushback of the company’s final Bauhinia Creek pit design, which decreased the availability of higher-grade ore and which would remain a key operational challenge and focus during the year, as the company looked to implement the life-of-mine extension project.

The ore grade reduction was a result of the use of higher volumes of lower-grade ore from both the Luika pit and stockpile during the ongoing Bauhinia Creek pushback.

The company also expected production for the first quarter of this year to be impacted by a poor availability of opencast mining equipment, exacerbated by a fuel contamination problem experienced in December, which had a negative effect on mining operations and saw waste mining fall behind schedule. “However, the guidance of 82 000 oz to 85 000 oz [for 2015] is maintained,” the company said in a statement.

CEO Mike Houston, who was retiring on March 31, commented that
the company had delivered a “very positive” operating performance over the last year, enabling Shanta to report full-year production ahead of guidance.

“The plant has been largely debottlenecked and the higher plant throughput has provided the flexibility to process increased volumes of ore,” he noted.

The commissioning of the new elution/electrowinning plant in May 2014 had resulted in a 5% increase in gold recovery. Silver recovery also increased from 22% to 65% with 101 347 oz produced for the year, up 307% from the 2013 production. 

The crusher/screening circuit was commissioned in October 2014 and, although operating at materially higher volumes than the old circuit, does require some modifications. These modifications would be completed by the supplier during the first half.

A record 24 700 oz of gold, including fulfillment of forward sales commitments, were sold during the quarter at an average price of $1 253/oz. Total gold sales for the year were 87 758 oz at an average price of $1 289/oz.  

Cash generation during the year was healthy, despite the lower gold prices, and enabled the company to fund its capital expenditure programme and service debt obligations, while maintaining a cash balance of $14.9-million at year end.

The new loan facilities agreed with Investec Bank, which are expected to be concluded in the first quarter, would give the company greater financial flexibility during the next phase of its development and lower debt servicing costs as the company sought to deliver value to shareholders through balancing capital growth and potential for dividends.

Meanwhile, Shanta also revealed that Houston would be succeeded by Toby Bradbury.

“I am pleased to welcome Bradbury to the senior management team from January 1. He has made an immediate impact through his enthusiasm and knowledge base and will add significant value to Shanta as the company moves into the next phase of its development," commented Houston.