An axiom of resource extraction is that when you dig something out of the ground, you need to find more of the same if you plan on growing the business. Three options – to explore for new resources nearby, elsewhere, or to buy someone else’s holdings – are the defining pressures whatever the producer’s size. A company’s ability to do this efficiently, safely and profitably is what separates the investable from the many also-rans.
- Second source of output imminent
- Cheap, significant new resources
- Healthy balance sheet
- Dividend-paying
- Costs rising at key mine
- Operational risks
After several bumps, Shanta Gold (SHG), the East Africa-focused gold miner, is starting to look as though it belongs in the investable category, rather than a speculative bet on the price of the yellow metal. It has grown its resources significantly in recent years, both through drilling at the New Luika mine in Tanzania, which has been in operation since 2012, and picking up new projects. One of these, Singida, will begin producing this year and raise company output to over 100,000 ounces (oz) in 2024.