JOHANNESBURG (miningweekly.com) – Aim-listed Shanta Gold turned the profit tide in the year ended December 31, 2017, posting a maiden profit after tax of $4.2-million, compared with the 2016 loss after tax of $8-million.

The East Africa-focused gold producer, developer and explorer posted an operating profit for the year of $11-million, up from the $3-million recorded in 2016, mostly owing to a significant reduction in yearly depreciation.

“Recording a profit in 2017 for the first time would not have been possible had the underground operation not been transitioned to on time and within budget and our efforts to optimise the company's recurring cost base will be a key driver towards improving future cash flows,” Shanta CEO Eric Zurrin said on Monday.

Earnings before interest, taxes, depreciation and amortisation for 2017 were $37.7-million, a contraction on the $50.2-million achieved in the prior year.

The year-end results reflected a sustainable transition to underground mining at the New Luika gold mine and a new management strategy of cost control and optimisation, Zurrin added.

Considerable inroads had also been made into reducing the company’s net debt position, with net debt at year-end reducing by $4.7-million to $39.5-million in the tailwinds of restructuring the company's balance sheet.

Shanta is going through a period of rapid deleveraging with $16.4-million of debt repayments scheduled for this year, said chairperson APW Durrant, adding that lower costs and the steady tapering of capital expenditure will help Shanta meet these obligations.

“The company goes into 2018 with a lower cost base. This will help provide some comfort from the vagaries of the gold price, while enhancing the company's net present value.”

A focus on effective cost management is likely to deliver further reductions in costs and new efficiencies this year.

“As the company's financial position strengthens, the board expects to be in a position to evaluate the timing of a dividend policy in the final quarter of 2018,” he said.

During the year under review, the company reported revenue of $103.4-million at an average realised gold price of $1 263/oz, compared with $107.1-million at an average realised gold price of $1 220/oz in 2016.

The 3.5% reduction in turnover was owing, in part, to a reduced production profile in 2017, in line with the revised mine plan and prior to the full ramp-up of the underground operation.

Cash and cash equivalents stood at $13.6-million at year-end, compared with $14.9-million in 2016.

Meanwhile, Shanta produced 79 585 oz of gold in line with the guidance of about 80 000 oz and down from the 87 713 oz produced in 2016.

It sold 80 365 oz of gold.