SHANTA Gold posted first quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of $15m compared to $8.6m in the previous quarter after adjusting for the non cash effects of out of the money hedge book.
The company sold 20,086 ounces of gold in the period at an average price of $1,414/oz compared to an average spot price of $1,582/oz. This included the settlement of 8,735 oz of forward sales commitments, the company said.
As of March 31, Shanta Gold had sold forward 31,265 oz to January 2021 at an average price of $1,247/oz. The gold price is currently trading at about $1,682/oz.
Since quarter end, total forward sales commitments have been further reduced to 27,304 oz, a 32% reduction from forward sales commitments in place at the end of 2019, the company said.
CEO, Eric Zurrin, chose to focus on the firm’s acquisition of Kenyan projects from Barrick Gold for $15m in cash and shares. The transaction, which is due to close mid-year, would transform Shanta Gold into a “… multi-asset and geographically diversified company”, Zurrin said. It had the potential to become “a significant producer”.
Shanta reiterated production guidance for 2020 of 80,000 to 85,000 oz at an all-in sustaining cost of $830 to $880/oz. The company produced 84,506 oz in gold last year which just about exceeded guidance of between 80,000 to 84,000 oz.
There had been no cases of COVID-19 in the Songwe region in Tanzania where Shanta Gold operates. Nonetheless, the company had been an “early adopter” of measures aimed at countering the disease.
Significant progress in outstanding VAT refunds from the Tanzanian government was not forthcoming during the period. VAT receivables increased to $22.9m from $21.8m in the previous quarter although there was a $700,000 refund which was offset against corporate taxes, the company said.
Shanta’s net debt increased slightly to $15.1m from $14.3m at the close of the previous quarter. However, the end March net debt number excluded $15.1m in bullion that was available for sale. Cash as of March 31 was $5.3m, up from $3.5m in the fourth quarter.
Shanta said it had extended the maturity date of outstanding convertible notes to April 2021 although they could be redeemed earlier.
