Modern Mining March 2018

GOLD

Deposits outside the Mine Plan include the Nkuluwisi Mineralised Target, located approxi- mately 12 km north-west of the plant, which has a JORC-compliant resource of 3,97 Mt at 1,1 g/t for a total of 140 894 ounces of gold. A substantial resource which is not owned by Shanta but which is within trucking dis- tance of the New Luika plant is the SMP project of Helio Resource Corp, which hosts 635 koz of gold at an average grade of 2,4 g/t. Shanta, in fact, announced in June last year that it was to acquire Helio but terminated the agreement in August, citing “the potential impact on Helio of the bills signed into law in Tanzania on 10 July 2017” as the reason for its decision. On the subject of the new legislation, Zurrin confirms it has impacted Shanta negatively. “Royalties have increased from 4 to 6 % and, on top of this, there is now a 1 % clearing fee on the value of all minerals exported from the country,” he states. “The net effect is that Shanta’s costs have increased by about US$40 per ounce of gold produced. We’ve responded by aggressively cutting our costs. In September last year we announced that we would target a US$5 million reduction of costs annually. We’ve bettered this. In fact, the savings we’ve already seen – translated to an annualised fig- ure – amount to US$8,7 million.” The savings are partly a result of the switch to the new mining method at the Luika under- ground mine but are also due to a reduction in headcount, the renegotiation of contracts with suppliers and the elimination of non- essential G&A (General & Administrative)

4 Mt of ore from 2017 through to 2023 with the underground sections accounting for the bulk of this although some open-pit mining will con- tinue throughout this period. Compared to the ‘Base Case Mine Plan’ announced in September 2015, the revised Mine Plan delivers a 39 % increase in gold production. It incorporates additional open-pit reserves at the Elizabeth Hill deposit and additional underground reserves at Ilunga. It is currently planned that the Ilunga underground mine – which will be accessed from a portal in the Ilunga pit – will come on stream in 2020. Over the past several months, there has been no open-pit mining at New Luika with all the ore being provided from either surface stockpiles or the underground operations but Zurrin says that surface operations will resume in March. “We need to dilute the high-grade underground ore with lower grade open-pit material to optimise the recoveries we get in the plant,” he observes. While the revised Mine Plan only extends through to 2023, Zurrin says it is very likely that New Luika’s operations can be extended beyond this date. “We have significant resources that sit outside the current Mine Plan. In addition, we hold over 1 560 km 2 of prospective ground in the Lupa goldfield – which, incidentally, is very under-explored – so there is clearly potential for us to find additional mill-feed for New Luika. We’ve had strong results from our exploration pro- grammes in the past and, since September 2015, have more than replaced mined ounces.”

The plant area at New Luika with the new 7,5 MW power station visible at the upper left of the photo.

“We’ve had strong results from our exploration programmes in the past and, since September 2015, have more

than replaced mined ounces.”

26  MODERN MINING  March 2018