Shanta Gold 's (SHG) half-year results, unlike those of its larger precious metals peers, were solely distinguished by their operational and corporate successes, and not by the benefits of a higher gold price. In fact, some ineffectual hedging and generally weak prices meant the Tanzanian miner sold its gold for an average of just $1,193 (£918) per ounce in the first six months of 2016, or 4 per cent lower than the same period a year ago.
The key difference is that Shanta was losing money on every ounce it sold at the beginning of 2015, but can now boast cash costs of $437 an ounce and guided all-in sustaining costs between $730-$780 for the year. This, combined with a 71 per cent uplift in production, caused cash profit to increase to $33m for the period, more than the total figure for all of 2015.
Development works - funded by a better-than-expected cash balance of $30.5m at the half year point - are also progressing well, with works now begun on a second tailing storage facility and the New Luika underground project on track and within budget for first ounces in the second quarter of 2017.
Analysts at Peel Hunt are forecasting full year adjusted pre-tax profits of $2.3m and EPS of 1.1¢, rising to $8.5m and 1.5¢ in 2017.
SHANTA GOLD (SHG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 9.63p | MARKET VALUE: | £56.1m | |
| TOUCH: | 9.5-9.8p | 12-MONTH HIGH: | 10.3p | LOW: 2.6p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 14.1¢* | NET DEBT: | 48% | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 31.9 | -10.3 | -1.8 | nil |
| 2016 | 55.7 | -3.0 | -0.9 | nil |
| % change | +74 | - | - | - |
Ex-div: na Payment: na £1 = $1.30. *Includes intangible assets of $23.2m, or 4¢ a share. | ||||
