It's now clear why Shanta Gold (SHG) delayed publication of its preliminary results. The Tanzanian miner was busy finalising an agreement with its bondholders to buy $10m (£6.9m)-worth of the $25m notes due for repayment next year. To do this, Shanta is raising the difference in an off-market equity placing at 6.5p a share, as well as a separate €5m (£3.9m) open offering at the same price.
The bondholders have been given a two-year extension on the redemption date, rescuing Shanta from a potential working capital quandary, and freeing up the much-needed cash for the $53m underground mine extension at New Luika. The pound of flesh offered to the lenders takes the shape of a 500 basis point increase in the bond coupon to 13.5 per cent. Separately, Shanta has secured $5.25m in a deal to provide a minimum of 11,250 ounces of silver by-product a month until 2022 to a specialist investment company.
As 2015 production figures had already been released, full-year results were largely academic. However, with the dollar-denominated gold price continuing to show support just below $1,300 an ounce, investors might have hoped for a better hedging deal for 2016. The first 32,000 ounces of gold produced between April and September will be sold at $1,172 each, only slightly more than the average first-quarter sales price.
Prior to these announcements, FinnCap was forecasting full-year pre-tax profits of $13.4m, giving EPS of 2¢.
SHANTA GOLD (SHG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 7p | MARKET VALUE: | £32.8m | |
| TOUCH: | 6.75-7.25p | 12-MONTH HIGH: | 8.6p | LOW: 2.6p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 16¢ | NET DEBT: | 54% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | nil | -12.3 | -5.6 | nil |
| 2012 | nil | -14.7 | -4.4 | nil |
| 2013 | 66.0 | -4.4 | 0.2 | nil |
| 2014 | 115 | 16.6 | 1.9 | nil |
| 2015 | 95.7 | -18.1 | -3.7 | nil |
| % change | -17 | - | - | - |
Ex-div: na Payment: na £1=$1.45 *Includes intangible assets of $23.2m, or 5¢ a share. | ||||
