Tanzanian miner Shanta Gold (SHG) has received part of its long-awaited VAT refund from the country's government. The gold miner has been watching its expected refund figure tick up for two years, almost reaching $30m (£23.3m) before the $1.4m payment last month, announced in the first week of November.
Shanta said little in its announcement beyond the payment amount, but has previously pegged deleveraging hopes on the refund.
Shanta chief executive Eric Zurrin has said for the past year or more his company would start seeing its cash returned once the Acacia/Magufuli spat was resolved. Last month, Acacia’s owner (formerly 64 per cent shareholder) Barrick Gold (CN:ABX) announced it had reached a final agreement with the Tanzania government, and the export ban was lifted in August. In the meantime, Shanta was been hit by the increased royalties that came in 2017, but was able to continue exporting gold, as it produces gold and silver doré bars rather than concentrate like two of the three Acacia mines.
The risks are still high under Tanzanian president John Magufuli: the $300m payment from Barrick has come about because the government accused Acacia of avoiding taxes of $40bn. It bundled that number up with interest and penalties came to a bill of $190bn, although is now happy to take 0.16 per cent of that figure. Those came from demands from lofty estimates of Acacia’s ‘real’ production, which as alleged by the government would have put it, impressively, on top of global gold production rankings.
While this drama was rumbling on, Shanta has been cutting costs and moving production at the New Luika mine from the open pit to underground. It had previously earmarked the refund cash – when it was $12m – for its new Singida mine, but has long since moved to another financing plan for the 26,000 oz-a-year project. This will see the new mine financed on a project level, possibly with a local listing.
