Shanta Gold makes headway in Tanzania (January 25, 2011)

Junior Shanta Gold (SHG-L) wants to make the leap from explorer to gold producer within two years. On Jan. 25 Shanta said it is on track to complete a detailed feasibility study by the end of June on its Singida gold project in central Tanzania and if the feasibility study is positive believes it can start construction there in early 2012.

It also announced that Tanzania’s National Environmental Management Council had approved its terms of reference for the Environmental and Social Impact Assessment (ESIA) on Singida. The ESIA is scheduled for submission within the next three months, and an environmental certificate is anticipated before the end of June.

Singida has a JORC-compliant measured resource, at a 1 gram gold per tonne cut-off grade, of 3.32 million tonnes grading 4.05 grams gold per tone for 432,283 ounces of contained gold and an indicated resource of 1.87 million tonnes grading 1.96 grams gold for 117,694 ounces of contained gold. Inferred resources add 4.21 million tonnes grading 2.28 grams gold for 308,508 ounces of contained gold.

 According to a prefeasibility study released on Dec. 17, average production would reach 43,000 oz. per year and a total of 387,000 oz. gold over a nine-year mine life. Capital costs are estimated at US$83 million, which includes US$43 million for the underground mine. Total cash operating costs were calculated at US$699 per oz., which includes the underground operations.

Shanta applied for three mining licences over the Singida project area in December. The project is made up of nine orebodies, all located within 5 km of each other. The prefeasibility study envisaged an annual mill feed of 540,000 tonnes from a series of open pits and underground operations, representing an average production rate of 45,000 tonnes per month. The average stripping ratio of the open-pit operations is estimated at 9:1.

Meanwhile, the company is also making headway at its advanced Chunya gold project in the southern highlands of Tanzania, where it has completed a feasibility study and expects commissioning to begin in the last quarters of 2011. Cash flow from a mine at Chunya is expected to help develop the Singida project next year, some analysts say.

Chunya has indicated resources at a 1 gram gold per tonne cut-off grade of 3.42 million tonnes grading 2.56 grams gold for 281,104 ounces of contained gold and inferred resources of 4.95 million tonnes grading 2.27 grams gold for 361,612 ounces of gold.

At presstime in London Shanta Gold was trading at about 33 pence per share, or around 52¢ per share.