Shanta to review cost base in light of new legislation, higher royalties

JOHANNESBURG (miningweekly.com) – East Africa-focused Shanta Gold is undertaking a business review of its operational and cost base in Tanzania, where it operates the New Luika mine, following the introduction of new legislation and higher royalty rates.

The Tanzanian Parliament earlier this month enacted the Natural Wealth and Resources Bill 2017 and the Natural Wealth and Resources Contracts Bill 2017, allowing the government to force mining companies to renegotiate contracts.

The Bills cover natural resource contracts and sovereignty and would amend existing laws to allow the government to renegotiate or dissolve contracts with multinational companies.

The country also amended its mining and tax laws, which will make it mandatory for the State to own at least 16% of mining projects, while also raising export royalties. The royalties for gold, copper, silver and platinum exports will increase to 6% from 4%, while uranium export royalties will increase from 5% to 6%.

Shanta on Wednesday said it expects its royalty rates to increase to 6% with its next gold shipment.

The gold producer expects to provide further details of the business review during the third quarter.

It, however, does not expect its gold production forecast for the year to be affected.

The New Luika mine produced 19 657 oz of gold in the second quarter of the year.

“The second quarter production result has far surpassed our projections while the underground mine ramped up. We have crossed the 40 000 oz of gold production mark for the year to date and are pleasingly on track to meet full year production guidance of 80 000 oz to 85 000 oz,” commented CEO Toby Bradbury.

He added that good progress was being made at the underground mine at New Luika, with first stope ore and commercial production declared on June 1.