25 May 2012

Shanta Gold in £15m funding

11/07/2011 Robert Tyerman

Tanzania-focused Shanta Gold (SHG) is to raise £15.1 million at 18p to help take its New Luika mine into production this December. The Guernsey-based company, whose broker and nominated adviser is Fairfax IS, says it expects the New Luika mine will produce 175,000 to 190,000 oz of gold in its first three years of production, at a modest grade of 3.5 to 3.8 grammes of gold per tonne of ore, at a cash cost of $560 to $610 an ounce, against a current market price of more than $1,5000.

Walton Imrie, executive chairman and substantial shareholder in AIM-quoted Shanta, points out that some of the proceeds will help fund the company's new joint venture with Toronto-quoted Great Basin Gold to explore the Lupa goldfield, also in Tanzania. Under the agreement, Shanta will issue Great Basin with shares at 35p to give it a 6 per cent Shanta stake, with warrants on another 6 per cent slice at the same price.

Imrie says the placing, which represents a hefty 46.5 per cent dilution, has received a 'high level of support from new and existing institutional shareholders'. Shanta has also arranged a $3.4 million (£2.1 million) facility with US hedge fund Yorkville Advisors, based in Jersey City and founded 10 years ago by Mark Angelo, backed by an existing standby equity draw-down agreement with Yorkville.

Floated six years ago at 25p, Shanta shares have traded between 35p and 14.75p over the past year. They now change hands at 18.5p, down 2.75p this morning, where they value the company at £33.4 million and offer speculative prospects.

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Tags: AIM market, Gold, Tanzania, Walton Imrie, Yorkton Advisors

Sector: Mining

Companies: Shanta Gold

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