Update on developments at Shanta's Mgusu Project

SHANTA GOLD LIMITED
("Shanta" or "the Company")
Update on developments at Shanta's Mgusu Project

25 JULY 2008

Shanta has previously advised that there have been delays in gaining
access to the Mgusu project in order to progress exploration
activities. This announcement serves to update shareholders on
current developments. The Mgusu Project lies in the Victoria Lake
Gold Field in the vicinity of AngloGold Ashanti's Geita Gold Mine.

At the time of admission to the AIM market, shareholders were advised
that Mgusu was the key project in the Shanta portfolio based, as it
was, on a mineral resource estimated by SRK Consulting, the
consulting technical advisers to the placing and admission, to
contain 740,000 ounces of gold. Further geological work was
recommended to establish the full extent of the ore body to focus on
the potential for mineralization to continue at depth. Such work
would entail further drilling on the property. Shanta acquired the
Primary Mining Licences (PMLs) and Prospecting Licences (PLs) from
various parties (the Vendors) and, acquisition was subject to the
licences being delivered free of artisanal activity.

With the subsequent discovery by the Company's geologists of a
greenstone belt known as Singida, Shanta initially focused
exploration attention and financial resources on this project on the
basis of adding the best value for shareholders.

Once the initial work at Singida was completed, the Company found it
difficult to access its Mgusu project as the illegal artisanal
miners, active on the property and in particular on the PMLs within
the area, had become militant. These miners had also initiated a
court case for compensation against the Vendors of the PLs and PMLs
which was settled in the favour of the Vendors. Subsequently the
Vendors commenced an eviction case against the illegal artisanal
miners in order to comply with their obligation to provide the
company with free access.

It is clear that the validity of legal rights granted under the
mining laws, whether to the Vendors or to the Company, was not
subject to question. Our legal advisors have been firm in their view
that the Company's rights have been properly awarded and maintained.

In order to obtain access to the property in the face of militancy,
the Company requires the support of the authorities and in particular
the District Commissioner who has advised Shanta that once the
eviction order is granted it will be enforced. The Company has
therefore acceded to a request from the District Commissioner to
await the outcome of the eviction court case. This has been in
process since February 2008 and a number of postponements have
occurred.  At recent meetings with the District Commissioner he
reiterated his assurance that the rule of law would be upheld.

Without being able to access the property, we are prejudiced by not
being able to carry out the geological evaluation as required. The
law prescribes that 50% of one of the licences (.416 square
kilometers) needs to be relinquished by mid September 2008. Without
being able to access the property to carry out geological evaluation
it is not possible to determine which portion of the area should be
relinquished.

Management, on legal advice, is pursuing various options open to the
company in an effort to protect this asset and gain access to the
property. The Board of Directors awaits the outcome of the various
legal processes underway, at which stage impairment in asset value
will be considered in the event the outcome is such that the Company
is unable to carry out exploration activities.

The legal framework for exploration and mining rights in Tanzania is
clearly defined and the legal rights of mineral rights are upheld.
Shareholders will be kept apprised of further developments.

Shanta continues exploration   activities at the Singida Project and
particularly at the Chunya project where assay results from the
second phase of a drilling programme are awaited. These results are
due for release in the near future. Readers are referred to our
announcements during 2006 and 2007 where these encouraging results
were highlighted.

Contacts

Shanta
Walton Imrie            [phone]
Walter Vorwerk       [phone]

Panmure Gordon
Edward Farmer      [phone]

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