By AGENCIES
THE New Luika mine in Tanzania, which is expected to start production in the third quarter, will be junior company Shanta Gold’s first producing mine, representing the company’s progression from explorer to a producer, CEO Gareth Taylor told Mining Weekly.
New Luika’s Bauhinia Creek and Luika openpits will feed the centralised 50 t/h processing plant.
Full gold production is expected by the end of the fourth quarter, while the mining of waste has continued since May 2011 and the mining of ore since November 2011. Wet commissioning of the process plant was completed in June.
“The project tests and hopefully confirms the Shanta Gold business model, which targets smaller orebodies and turns them to account at low construction costs in a short time, giving quick returns to stakeholders,” says Taylor.
As New Luika moves into full production, the cash flows generated will give Shanta Gold greater financial flexibility to replicate this high-grade low-cost model across its high-quality portfolio, he says.
Meanwhile, the company will soon publish an updated resource statement, which is expected to show growth in the New Luika gold mine’s resource.
“This will be followed by a revision of the life-of-mine and business plan, which should lead to an improvement in the economics of the project,” he adds.
A challenge of this project was finding the right mix of technical and financial support in a difficult economic environment, says Taylor.
Shanta Gold was able to achieve this with the help of supportive shareholders who recognised the potential of the New Luika project and Shanta Gold’s wider portfolio.
Mining Weekly reported in February that Shanta Gold had signed a loan agreement with UK-based bank FBN for $15-million to finance continuing operations at New Luika, including plant construction and mining costs, as well as to fund the start of the Singida project
The agreement allowed Shanta Gold to draw down $12.5-million immediately and, on provision of the wet commissioning certificate for the New Luika metallurgical plant, a further $2.5-million will be available for drawdown, subject to other standard conditions being met.
The loan is repayable within 18 months from the first drawdown date and repayments will take place in 12 equal monthly instalments of the facility drawdown, after a grace period of six months.
Further, Shanta Gold said in April it would seek to raise at least $35-million to bring the New Luika mine into production, Mining Weekly reported.
The raising consisted of $25-million by way of five-year convertible loan notes and a minimum of $10-million through an equity placing of new ordinary shares.
“We have also been able to bring together a strong, experienced management group, which played an important role in overcoming the many challenges which remote projects face during construction,” says Taylor.
Shanta Gold is also currently working on the Saza Village tailings dump joint venture project, located 7 km from the New Luika gold mine.
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