“Post the period under review, Tanzanian mining legislation continued to evolve,” notes Shanta Gold (SHG) at the start of its half-year figures. Let’s be frank: ‘evolve’ means ‘deteriorate’ here, at least from the perspective of the small gold miner. But while higher royalty rates have already shrunk Shanta’s share price and full-year earnings projections, the Aim minnow used these results to calmly reassure investors that 2017 production forecasts are on track.
Granted, this will be towards the lower end of previously issued guidance for 80,000-85,000 ounces (oz) of gold, largely due to the absence of production from the now-suspended Singida pilot plant. The good news is that, with 41,234oz sold in the first half of 2017, the vast majority of the year’s remaining output has been forward sold at an average price of $1,278 an ounce, a $38 premium to this year’s average London fix.
Tanzania’s stand-off with its extractive industry, principally Acacia Mining (ACA), has had its effects elsewhere. With a financial tightrope ahead of it, Shanta’s board has replaced chief executive Toby Bradbury with chief financial officer Eric Zurrin. And the purchase of Canada-listed Helio Resources has been cancelled. Most pressingly, VAT refunds continue to stack up, and now amount to $13.6m. On average, analysts expect full-year adjusted pre-tax profit of $7.37m and EPS of 0.8¢, versus losses of $4.34m and 1.5¢ in 2016.
| SHANTA GOLD (SHG) | ||||
| ORD PRICE: | 3.4p | MARKET VALUE: | £25.9m | |
| TOUCH: | 3.3-3.5p | 12-MONTH HIGH: | 13.4p | LOW: 2.6p |
| DIVIDEND YIELD: | NIL | PE RATIO: | N/A | |
| NET ASSET VALUE: | 11.7¢* | NET DEBT: | 49% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | ($m) | profit ($m) | share (¢) | per share (¢) |
| 2016 | 55.7 | -3.03 | -0.95 | nil |
| 2017 | 52.7 | -0.65 | -0.36 | nil |
| % change | -5 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| £1=$1.29. *Includes intangible assets of $23.3m, or 3¢ a share. | ||||
