Results of Chunya Feasbility and Issue of Equity

SHANTA GOLD LIMITED

               RESULTS OF CHUNYA FEASIBILITY AND ISSUE OF EQUITY

5 July 2010

Shanta  Gold Limited ("Shanta Gold" or the "Company") is pleased to announce the
completion  of its  Feasibility Study  on the  Chunya gold  project in  the Lupa
goldfield  in  southern  Tanzania.  The  study  was conducted and coordinated by
Environmental, Process and Mining Consultants (Pty) Ltd ("EPMC") a South African
based  consultancy  with  a  proven  track  record and many years of  successful
performance.

Overview of feasibility study results:
   ·     The study supports a 360,000 tonnes per annum metallurgical process
plant fed from a number of open pit operations all within 3 km of the
metallurgical plant which could produce an average of 28,400 ounces of gold per
annum over an eleven  year production life. Construction is estimated to take
one year. A 50 tonnes per hour capacity plant consisting of crushing and
screening, comminution, conventional CIL and smelting is forecast to achieve an
89% recovery in dore bars.
   ·     Average operating cash cost of US$643/ounce.
   ·     Capital estimated at US$23.1 million with a payback period of two
years.
   ·     A robust project internal rate of return (IRR) of 39% and when
discounted at 7% a net present value (NPV) of US$37.5 million at a base case
gold price of US$1100.
   ·     Mine construction is expected to be completed within nine months of
project start-up.

The  Company has been investigating various avenues of financing for the project
and these will which are anticipated to be finalised in due course.

The  opportunity exists to double the  mine's capacity to exploit the additional
resource   already   evaluated  and  any  further  ore  resulting  from  ongoing
discoveries.  Initial incremental capital  estimates for the  expansion are US$5
million  (to  double  capacity)  and  the  plant  layout  has  been  designed to
accommodate such expansion.

Project Summary

EPMC  of Johannesburg, South Africa conducted  the feasibility study to evaluate
the economic potential of developing a small to medium scale mining operation at
Shanta Gold's Chunya gold project in southern Tanzania. In doing so EPMC project
managed  the  additional  inputs  from  specific  specialist  consulting  groups
including  Geologix (Pty) Ltd (ore  resource consultants), Epoch Resources (Pty)
Ltd  (tailings  design  and  EIA),  Mintek  (metallurgy),  DRA  Engineering  Ltd
(process  design and infrastructure) and  MINOPEX (Minerals Operations Executive
(Pty) Limited) (process plant operations).

The  study demonstrated the feasibility of a series of open pits with a combined
life in excess of 10 years, exploiting the resources delineated by Shanta during
the   past   three  years  and  calculated  by  Geologix,  independent  resource
consultants  to the  Company. A  key element  in designing  the mine has been to
implement a selective mining strategy supported by grade control drilling across
mining  blocks of 3mx3m. The  mined ore will  be hauled to  a 360,000 tonnes per
annum  capacity process facility,  comprising a crushing  and screening section,
followed  by a  mill circuit  and then   a conventional  carbon in leach ("CIL")
circuit. Gold recovery will be by smelting to dore bars.

The  capital  expenditure  to  develop  the  mine is estimated at about US$23.19
million. Capital recoupment is anticipated to be achieved within two years. This
estimate  is based on new  equipment and Shanta plans  to reduce capital through
appropriate second hand purchasing.

The feasibility study projects production of an average of 28,400 ounces of gold
per  annum at an average cash cost of US$643 per ounce. The level of annual gold
production  is dependent on the pit being exploited and rises from 28,000 ounces
in  Year 2 to 44,000 ounces in Year 8 and then  decreases to the end of the mine
life, when low grade stockpiles are processed.

The  project has an IRR of 39% and a NPV  of US$37.53 million at a gold price of
US$1,100  per ounce. At a 10% discount rate the NPV amounts to US$29.96 million.
These results are based on constant money value modelling.

Sensitivity  analysis  of  a  number  of  the key variables has demonstrated the
project  should be robust and be able to withstand changes in capital, operating
cost gold price and grade.

The  project as designed does not fully  exploit the possible resource upside at
Chunya  and potential exists to expand the plant capacity further, as well as to
exploit  additional open pittable  resources that may  be discovered through the
ongoing exploration programme. This is demonstrated by the fact that the current
open  pit designs stop  on high grade  boundaries, and further  drilling is thus
expected  to extend  economic ore  zones beyond  existing pit  designs. Possible
extensions  and  new  ore  bodies  currently  being  tested  are described in an
announcement  released on  30 June 2010. A  preliminary estimate  of the capital
required to double the capacity is US$5 million.

Further  upside is indicated by a common high  grade zone in the core of most of
the  ore bodies that could in future  be exploited by underground mining methods
on  completion of the economic  open pit stage. This  has not been considered in
this  study. Additionally, in the feasibility, no  account has been taken of by-
product silver, which occurs at a ratio of approximately 2:1 in the ore bodies.

The  Company  proposes  to  use  both  contractor  mining and contractor process
operation  and  discussions  are  underway  with  competent  contractors in this
regard.

Shanta  Gold is exploring financing  options for the development  of the mine at
Chunya and has a number of advanced discussions underway.

Feasibility study financing

The  feasibility study  was commissioned  during May  2009, at the risk of third
parties,  and  Shanta  Gold  entered  into preliminary conditional agreements to
raise  finance to pay for the feasibility study from parties associated with the
preparation  there-of. Funds were to be raised at a price of 8p per share with a
warrant attached for every two shares subscribed for with a strike price of 10p
per  warrant, such warrants to have a term of 2 years from the date of grant and
to be exercised if the Shanta share price exceeds 15p for 15 consecutive trading
days  12 months after the date of grant.   The price of ordinary shares averaged
2.92p per  share during  the month  of May  2009. Participants in  the financing
agreed not to dispose of the shares for 90 days from the date of allotment.

DRA  (process engineers to the feasibility  study) subsequently agreed to accept
shares in lieu of cash due for work completed directly for the feasibility study
and  agreed  to  contribute  additional  funding.  Some participants in the fund
raising  required  South  African  foreign  exchange  control approvals prior to
providing the funds and agreements were dependant on this being obtained.

As  a result of the conditional agreements  and described above, the Company has
today  agreed  to  issue  a  total  of  11,540,033 shares  at  8p per  share and
5,770,016 warrants  to the parties in connection  with the financing and in lieu
of fees due. Of the total issue of shares, 9,906,046 shares have been placed for
cash  to  raise  £792,483.68  (before  expenses)  and 1,633,987 shares have been
issued  in lieu  of fees  due to  be paid  in cash.  The parties involved in the
financing  have agreed that they will not sell  any of the shares issued to them
within 90 days of the date of issue.

DRA  will  receive  1,633,987 shares  at  8p per  share  and 816,994 warrants in
respect  of work completed  and 4,901,961 shares at  8p per share and 2,450,980
warrants in respect of the financing.

Application  will be made to the London Stock Exchange plc for 11,540,033 shares
to  be admitted to  trading on AIM  and it is  expected that admission will take
place  at 8.00 a.m.  on 9 July  2010.  The shares  will, when  issued, rank pari
passu in all respects with the Company's existing ordinary shares.

Following  the issue  of 11,540,033 ordinary  shares of  0.01p each as described
above, the Company will have a total of 127,032,887 voting shares in issue.

For further information:

Shanta Gold Limited 

http://www.shantagold.com

Walton Imrie
Mobile: [phone]

David Scott
Mobile: + 255 (0) 784 366146

Gareth Taylor
Mobile: [phone]( )

Walter Vorwerk
Moblie: +27 (0)83 308 0080


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







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