Operational Update

22 March 2012
Shanta Gold Limited [AIM: SHG]

("Shanta Gold" or the "Company")

Operational Update

Key developments

• General Manager appointed at Singida
• Review of high security area design following recent security incidents in Tanzania
• Commissioning of New Luika gold mine delayed by amendments to security and customs procedures
• Financing review to cover the delayed commissioning of the New Luika Gold Mine and the development of the Singida project

Appointment of General Manager for Singida project

Shanta Gold is very pleased to announce the appointment of Mr Philbert Rweyemamu as General Manager of the Singida project.

Philbert is Tanzanian and has 34 years of mining experience. This includes the position of Mining Manager for Barrick Africa in Tanzania and various senior positions in De Beers South Africa, including General Manager of Namaqualand mines.

Philbert will be responsible for management of the final design and construction of the Singida project as well as operation of the producing mine.

New Luika Gold Mine completion

The management of Shanta Gold has deemed it appropriate to review the security procedures and designs at the New Luika Gold Mine following a serious breach of security at a Tanzanian mine in the Lake Victoria Goldfields area.  Appropriate changes to Shanta Gold's security designs have now been incorporated into the plant build schedule.

These delays have been exacerbated by the changes applied, since early 2012, by the Tanzanian Revenue Authority to its processes for importation of goods into Tanzania. These changes have resulted in lengthy delays in moving certain items into Tanzania affecting all imports and this has had a consequential impact on the timing of delivery of certain items and equipment required for the construction of the New Luika Gold Mine.

Against the background of these delays, the EPCM contractor is attempting to reschedule the plant build in order to catch up on lost time.  All options are also currently being reviewed to complete the plant commissioning as early as possible. A new schedule, which is aimed at reducing the effect of the delays as far as possible, is currently being finalised.  Shareholders will be advised on the revised timeline in due course.

Financing

Shanta Gold is currently reviewing financing options to cover the delayed commissioning of the New Luika Gold Mine and the development of the Singida project.

As a first option, Shanta Gold has signed an indicative term sheet for a debt facility for the Singida project to the value of US$ 40 million. The Company will make an additional announcement relating to the terms of any loan agreement, as soon as any binding terms are entered into.

 

Secondly, Shanta Gold are in advanced discussions with a London based group for a $20 million cash injection, supported by a mixture of a royalty and off take agreement, to bridge the funding gap as a result of the delay in mine production

 

Further funding options are under consideration and are at an advanced stage.

For further information, please contact:

Shanta Gold Limited
Walton Imrie
Tel: [phone]
Gareth Taylor
Tel: [phone]

Nominated Adviser and Broker
Fairfax I.S. PLC
Ewan Leggat / Laura Littley
Tel: [phone]

Financial Public Relations
Tavistock Communications
Emily Fenton/Ed Portman
Tel: [phone]

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Source: Shanta Gold Limited via Thomson Reuters ONE

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