Writing on Shanta Gold (SHG) just a few days ago we noted a positive exploration drilling and resource update had helped the shares up but that there still looked much more to go for. A “Q1 2021 Production and Operational Update” has since helped the shares further higher. So, what’s the detail?
The update notes gold production of 14,641 ounces, 15,149 ounces of gold sold at an average $1,801 per ounce and all in sustaining cost of $1,307 per ounce (including $204 per ounce in development costs). However, also “net cash of US$31.0m (Q4 2020: US$37.3m)”. That was though with not only work across all three of its assets - New Luika gold mine and Singida project in Tanzania and West Kenya project in Kenya - but encouraging drilling results across all three and still with only 19% of scheduled drilling so far this year.
Additionally, there is an ongoing ramp-up of a new third mill at New Luika and full-year guidance of approximately 80,000 ounces at all in sustaining cost of $1,050-1,100/oz is reiterated. We’ve noted potential to beat the net 2020 performance – a post-tax profit of $17.2 million as a result of New Luika production, with also then the development of Singida – projected to add gold production of 32,000 ounces per year at an all-in sustaining cost of $869/oz with first gold pour expected in late 2022 and, longer-term, West Kenya – a scoping study already having derived a post-tax NPV8% of $340 million.
With even at just over 15p, the market cap circa £160 million, currently approx. $222 million, we continue to consider a 25p+ share price is realistic as news flow continues and on gold sentiment turning more positive again. At up to 16.5p, still a buy.
Filed under: Shanta Gold, Tom Winnifrith, Hurricane Energy, Barclays, Zoetic, HotStockRockets
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