Joint Venture Option Agreement to Treat the Saz...

SHANTA GOLD LIMITED

             JOINT VENTURE OPTION AGREEMENT TO TREAT THE SAZA DUMP

                               28 September 2010

Shanta Gold Limited ("Shanta" or the "Company") is pleased to announce, that
after an extended negotiation, the Company has concluded a dump re-treatment
Joint Venture Option Agreement with the Saza Village Council (the "Village"),
Chunya District in southern Tanzania.

SUMMARY

  * Saza Village is the owner of abandoned tailings dumps, concrete works and
    rock dumps located within the village boundary and resulting from the
    activities of the abandoned colonial era New Saza Mine over a lengthy period
    of colonial era mining that ended in about 1956.
  * Saza Village Council has agreed to enter into a joint venture with Shanta
    which will enable Shanta to evaluate and, if economic, re-treat the dumps
    and infrastructure.
  * The Saza dump is located within 7km of the proposed New Luika Gold Mine on
    which construction is planned to commence during the 4th quarter of 2010.
  * Approximately one million tonnes of ore was processed at Saza. The amount of
    tailings on the dump, roughly estimated at 500,000 tonnes, will be
    determined during evaluation.
  * The initial evaluation programme will consist of dump drilling using
    aircore, sampling, volumetric determination, assaying and metallurgical test
    work.
  * Once the test work has been completed, the dump will be incorporated into
    the New Luika Gold Mine production plan and financial model to determine
    whether re-treatment is economic.
  * If the dump re-treatment is economic, the Company will incorporate this into
    the New Luika Gold Mine production schedule.
  * On conclusion of retreatment Shanta will rehabilitate the ground making it
    available for incorporation into the Saza Village's development plans

TERMS OF AGREEMENT

The Company and the Village have concluded a joint venture option agreement. The
Village has granted Shanta an exclusive right to evaluate and eventually
re-treat the Dumps of behalf of the joint venture. At signature of the
agreement, Shanta has paid the Village an amount of US$50,000 and must, within
twenty four months, evaluate the economics of re-treating and recovering the
gold.

At any stage during the evaluation but before the end of the twenty four month
period the Company may decide whether to proceed with the re-treatment project.
On reaching this decision, the Company will pay to the Village a lump sum of
US$250,000, the Option Fee. On payment of the Option Fee, Shanta will have the
exclusive right to re-treat the Dumps within a period of ten years of signature
of the agreement. A treatment royalty of $2 per tonne is payable to the Village
for ore material extracted from the dump. The Village and Company have agreed to
form a trust which will hold a portion of the royalty payment. The balance will
be paid into the Village bank accounts in cash. Both the Company and the Village
will be represented on the board of the trust, whose purpose will be to invest
the trust funds and secure a steady sustainable investment income for use in the
long term development of the Village.

On completion of the removal and re-treatment of the dumps and infrastructure
the Company will rehabilitate the site. A rehabilitation fund, into which the
Company will make regular deposits as the dump re-treatment project progresses,
will be established for this purpose. The payments will be pro rata the tonnage
treated and in accordance with an environmental rehabilitation cost estimate. If
during the project it becomes uneconomic to continue and the Company decides to
cease re-treatment, the Village shall have the option to retain ownership of the
dump. If the Village elects to retain ownership, the Company will be released
from its obligation to rehabilitate the site save to provide the accumulated
funds for this purpose.
Walton Imrie, Executive Chairman, commented:

"This is an opportunity for Shanta to make a significant contribution to the
future welfare of the Saza Village through the removal of a dump that has been
steadily eroding into and polluting the nearby streams, rivers and Lake Rukwa,
by injecting a significant short term cash flow into the village community, and
through the establishment of a trust fund to provide a future long term
sustainable cash flow, all of which will change the village irreversibly. Should
the evaluation of the prove its economic viability, the dump can be loaded,
hauled and treated at a low cost at our proposed New Luika Gold Mine and provide
a good profit to the company."


For further information:

Santa Gold Limited 

http://www.shantagold.com

David Scott
Mobile: [phone]

Walton Imrie
Moblie: [phone]


Fairfax I.S. PLC
Ewan Leggat/Laura Littley
[phone]


[HUG#1447283]








This announcement is distributed by Thomson Reuters on behalf of 
Thomson Reuters clients. The owner of this announcement warrants that: 
(i) the releases contained herein are protected by copyright and 
    other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
    
Source: Shanta Gold Limited via Thomson Reuters ONE