Shanta Gold (SHG) has made it to net cash despite having an arm tied behind its back because of its hedging programme.
The Tanzanian gold miner saw a major uptick in sales in the June quarter and it was able to knocked $17m (£14m) off its gross debt thanks to the high gold price and a fall in all-in sustaining costs.
Even with production still hedged below the spot price, Shanta’s average sales price for the period was $1,663 an ounce (oz).
The company says it will complete its West Kenya project acquisition by the end of September, paying $7m in cash and $7.5m in shares, so this will eat into its cash balance. Seller Barrick Gold (US:ABX) is getting a good deal on the shares: the February deal announcement locked in the shares at 10.5p, a third lower than the current level.
Adjusted cash profits for the quarter were $19m, almost double year-on-year. This figure is adjusted for the impairment that will come from selling some gold at below spot because of its forward sales. As of June 30, the company still had 27,000oz to sell by January at a paltry $1,251/oz. This is around half the rest of the year's production according to its 2020 guidance of 80,000-85,000oz.
Shanta’s share price was up 11 per cent on the news, to 16.3p.
