Modern Mining March 2018

GOLD

spending. Based on the encouraging results to date, Shanta has increased its cost savings target from US$5 million to US$7 million per annum on a run rate basis. These savings exclude the lower costs of the changed mining method at Luika and are expected to be identi- fied and executed by the end of Q3 2018. Zurrin adds that Shanta has had some suc- cess with the vexed issue of VAT refunds, a problem for all mining companies operating in Tanzania. “During the last quarter of 2017, we received a VAT refund of US$3,4 mil- lion, which was the largest returned to any miner operating in Tanzania during the period,” he says. Looking forward, Zurrin says that Shanta is in constant engagement with the government on a range of issues. He notes that Shanta does not – like some of its peers – enjoy the benefits of a Mine Development Agreement (MDA) and that it has always paid full royalties, duties and levies. “Certainly, we would like to have an MDA in place, particularly given the fact that we are heading towards the development of a second mine in Tanzania.” The second mine Zurrin refers to is Singida in central Tanzania. In a major step forward, Shanta declared a maiden JORC-compliant resource in November 2017 of 728 koz of gold for the Singida project using a cut-off grade of 1,84 g/t, with the resource being based on seven shear-zone related gold deposits with a combined strike of 4,9 km. All the deposits are situated within three Shanta-owned min- ing licences. “Singida is very exciting,” comments Zurrin. “It was originally Shanta’s flagship asset and it remains a very attractive project which has the potential to produce at a rate of 30 000 oz/a for at least five to six years from open-pit operations with the ore being treated in a relatively small 60 t/h, CIL/gravity plant. The capex is modest at just US$25 million. We’ve completed a resettlement programme at the site and all the important technical studies have been completed. “Essentially, the project is development ready and we’re now speaking to finance pro- viders. Since we’re currently focused on debt repayment, our preference will be for asset-level financing. The business case for developing Singida is compelling, so we believe our efforts will meet with success. As regards the timeline, Singida – under a best case scenario – could be in production within 12 to 15 months.” If Shanta is successful in bringing Singida on line, its gold production would probably exceed the 100 000-ounce-a-year mark and

Shanta’s CEO a finance expert A Canadian citizen, Eric Zurrin was appointed as Chief Executive Officer (CEO) of Shanta in August 2017, succeeding Dr Toby Bradbury, whose tenure saw the underground project at New Luika being successfully implemented. Zurrin holds a Bachelor of Commerce (Accounting) degree and has 15 years’ expe- rience in investment banking and mining, previously with UBS Investment Bank in London. He has a long acquaintance with Shanta, having served as an adviser to the cement Shanta’s status as a mid-tier miner. “We would certainly like to have a second mine. Having said that, the emphasis for Shanta going forward is going to be on profitable ounces and on maximising shareholder returns. Singida apart, we have no immediate plans for further new mines – although we are always prepared to look at good opportunities,” says Zurrin. “Shanta is in a very good place at the moment. Our primary asset, New Luika, has all the infrastructure in place to operate well into the future, our debt is coming down and we’re generating strong cash flows. We’re now ready to benefit from all the hard work put in over the past eight or so years which has seen Shanta reopening the long-neglected Lupa goldfield and establishing itself as a key player in Tanzania’s gold mining industry.” Photos courtesy of Shanta Gold

Installing mesh support in the decline. Around 220 peo- ple work in the underground mine.

Eric Zurrin.

company over a period of years. He was appointed as interimChief Financial Officer (CFO) in 2015/2016 and was re-appointed as CFO in March 2017. The Shanta board believes his strong finance, investment and commer- cial expertise will be invaluable to the company as it navigates a changing business environment in Tanzania and refocuses its strategy on cost and capital control.

March 2018  MODERN MINING  27