Shanta Gold takes gross debt down to lowest level in decade as prepares maiden dividend

Gold doré

SHANTA Gold repurchased outstanding loan notes and repaid a debt facility with a commercial bank taking gross debt to $1m, described by the firm’s CEO, Eric Zurrin, as “… probably the lowest level in a decade”.

As of end-March, the company had an unrestricted cash balance of $41.9m as well as $29m in VAT receivables due from the Tanzanian government. The debt and convertible were repaid post the closure of the first quarter, details of which were published today.

The company reported production of 14,641 oz for the quarter, down about 5,000 oz on both the previous quarter and first quarter of the previous financial year. However, Shanta kept full year production guidance of 80,000 oz unchanged.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $7.6m compared to $15.6m in the fourth quarter of the 2020 financial year.

Commenting on the VAT receivables, Zurrin said that discussions were underway at “senior levels” of the Tanzanian government. Shanta is by no means alone as Petra Diamonds, a diamond producer operating in Tanzania, also cited unresolved arrears in VAT payments in its first quarter numbers this week.

The highlight for Shanta this year was the previous quarter’s declaration of a 10 pence per share maiden dividend, the proceeds of which will be paid out in the next few weeks. “541 shareholders will be paid a maiden dividend. This is a major milestone for me personally,” said Zurrin at a presentation today.

Looking forward to the remainder of 2021, Zurrin said he was hopeful of a resource update on its West Kenya project by the middle of the year. The company was also working on the completion of Singida, a project in Tanzania that will add 32,000 oz/year in production from the fourth quarter of 2022.

Shanta’s prospects have also been boosted by the fact it has worked through its remaining hedging contracts. The gold price received at $1,801/oz was 29% higher than in the previous quarter.