Shanta Gold : Q4 2019 Production and Operational Update Presentation

Q4 2019 Production and Operational Update

16 January 2020

Disclaimer

This Document comprises an institutional update presentation (the "Presentation") which has been prepared by and is the sole responsibility of Shanta Gold Limited (the "Company"). This Presentation does not constitute or form part of an admission document, listing particulars or a prospectus relating to the Company or any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall it or any part of it form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever or constitute an invitation or inducement to engage in investment activity under section 21 of the UK Financial Services and Markets Act 2000. This presentation does not constitute a recommendation regarding any decision to sell or purchase securities in the Company.

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Q4 2019 Results

2

Shanta Gold - Highlights & Guidance

Q4 2019 performance

• Gold production of 19.6k oz at New Luika
• Cash costs of US$638 /oz, AISC1 of US$902 /oz
• Incremental gold reserves of 135,438 oz grading 4.07 g/t
• Net debt reduced 31% to US$14.3m

2019 production ahead of guidance

• Gold production: 84,506 oz, exceeds guidance of 80-84k oz
• Cash costs of US$544 /oz
• AISC1: US$779 /oz, in line with guidance of US$740-780 /oz
• Exceptional safety record with zero LTIs in 2019

2020 guidance

• Gold production: 80,000 - 85,000
• AISC1,4: US$830 - 880 /oz
• Exploration budget increased by 65% to US$5.0 million

Reliable, low cost producer

84 82 88 80 82 85 80-85

64

2013	2014	2015	2016	2017	2018	2019	2020
								Guidance
	Summary Capitalisation
	Share Price (GBP) (15Jan2020)		10.6 p
	Market capitalisation				US$109 m
	Net debt (31Dec2019)				US$14 m
	Enterprise Value				US$123 m
	EBITDA2					US$48 m
	EV / 2019 EBITDA					2.6 x

1.	Development costs at the Bauhinia Creek, Luika and Ilunga underground operations are not included in AISC
2.	Before non-cash loss on unsettled forward contracts
3.	Includes liquidity available from unsold doré at refinery	3
4.	Includes non-cash impact of reduction in ROM stockpile (US$/20/oz), higher royalties due to higher gold price (US$20/oz), open pit mining (US$40/oz)

Q4 2019 performance

Quarterly gold production (000's oz)

21.3		23.9	22.4		22.7
20.5	19.7	19.9
	19.6
	17.7

Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
2017			2018				2019

Quarter on Quarter AISC1,2 ($ /oz)

902

767	776	748	769	696	701	773	723

Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
2017		2018			2019

1. Development costs at the Bauhinia Creek, Luika and Ilunga underground operations are not included in AISC
2. Q4 2019 AISC includes $47 /oz for accelerated power station generator refurbishments

Q4 2019 Results

4

Q4 2019 underground update

• 144 kt of ore grading 5.17 g/t mined from NLGM's active high-grade underground deposits

	180		Tonnes Ore Mined and Development Metres, by Quarter		2,500
	160
	140											2,000
	120
	100											1,500
	80											1,000
TonnesMinedOre(kt)	60											Developmentmetres(m)
	40											500
	20
	-											-
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
		2017					2018			2019

Development Metres (BC)		Development Metres (Luika)		Development Metres (Ilunga)
Tonnes Ore Mined (BC)		Tonnes Ore Mined (Luika)		Tonnes Ore Mined (Ilunga)

1. Includes ore from development and production BC = Bauhinia Creek

Q4 2019 Results

5

FY 2019: New annual record of 702,336 tonnes milled

	FY 2019	Q4 2019	Q3 2019	Q2 2019	Q1 2019	FY 2018	FY 2017
Tonnes ore mined (OP+UG)	603,373	144,206	166,772	155,779	136,616	677,734	638,088
Tonnes ore milled	702,336	177,913	174,132	177,647	172,644	639,678	632,287
Grade (g/t)	4.19	3.83	4.54	3.91	4.49	4.38	4.28
Recovery (%)	89.4	89.2	89.3	89.4	89.9	90.9	91.1
Gold production (ounces)	84,506	19,550	22,726	19,856	22,374	81,872	79,585
Gold sales	80,758	17,311	22,477	19,780	21,190	82,457	80,365
(ounces)
Realised gold	1,378	1,440	1,462	1,303	1,309	1,259	1,263
price (US$ /oz)

Q4 2019 Results

6

FY 2019: US$46.5 million cash flow generated

EBITDA (US$ million)	Operating cash inflow before movement
	in working capital (US$ million)

$50.2		$50.1
$47.7
$46.5
$45.7	$46.1
$37.7		$40.3
$31.9		$31.8

2015

2016

2017

2018

2019

2015

2016

2017

2018

2019

Note: 2019 adjusted for non-cash loss on unsettled forward contracts 2015-2018audited financial results are unadjusted

Q4 2019 Results

7

Balance sheet repair:

69% decrease in Net Debt since Q3 2017

Net debt1 (US$ million)

US$31.2 million (69%) decrease

45.5

		39.5	37.5	38.1
								35.1
										31.5	30.3
														26.9
																20.7
																		14.3
	Q3		Q4		Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4
2017	2017	2018	2018	2018	2018	2019	2019	2019	2019

1. Includes liquidity available from bullion delivered to the refinery prior to 31 December 2019

Q4 2019 highlights

• Sharp fall in quarterly net debt
• Unrestricted cash balance of US$3.5 million plus US$4.2 million bullion at refinery in Switzerland at 31 December 2019
• Total liquidity of US$13.7 million, including US$3.5 million of bullion available for sale in the New Luika gold room at 31 December 2019
• Gross debt at US$22.0 m, the lowest in over 7 years

Q4 2019 Results

8

Value transfer to Shanta Gold shareholders

Significant transfer of value from debt to equity since Q3 2017

Shanta Gold Enterprise Value

EV (US$m) = Net debt + Market Cap 1

	42%		89%

Market Cap (US$m)	$123m
Net debt (US$m)

$79m
33		59	61	57	48	53	71	81	80	109
46		40	38	38
		35	32	30
					27
									21
										14
Q3	Q4	Q1	Q2		Q3	Q4	Q1	Q2		Q3	Q4
2017				2018				2019

Highlights

• Shanta's market cap now accounts for 89% of Enterprise Value, up from 42% in Q3 2017
• SHG share price continues to re-rate, up 239% since Q3 2017 results (17 October 2017)

Q4 2019 Results	1. Net debt and Market Cap based on the figures reported in quarterly results presentations since Q3 2017	9

Q4 2019 Exploration: 135k oz new gold reserves added to the mine plan (as at Oct 1st 2019)1

• 6-monthdrilling campaign, 81 holes, 8.5km, costing c. US$1 million
• 135k oz new probable reserves added to the mine plan
• All within 4 kilometres of the processing plant

Incremental Probable Reserves announced 18 November 2019

Deposit	Mine2	COG (Au_g/t)	Tonnes	Au_g/t	Ounces
Bauhinia Creek	UG	1.9	361,821	6.32	73,471
Bauhinia Creek North	OP/UG	0.6/1.9	174,651	3.21	18,037
Black Tree Hill	OP	0.6	292,395	1.33	12,469
Elizabeth Hill	OP	0.6	205,054	4.77	31,460
Total			1,033,920	4.07	135,438

* Reserve figures converted during a period of Jan to Sept 2019 by source

1. Excludes reduction of 44k oz reserves at Ilunga following additional grade control drilling since 2017
2. OP denotes Open pit; UG denotes underground

Q4 2019 Results

10

Q4 drilling update

• 66 holes totalling 7,410 metres drilled between October and December at a cost of US$0.7 million
• Included the intersection of high grade mineralisation at encouraging widths
• All drilling on existing mining licences

Selected intersections announced in December 2019:

BC North deposit

BC East deposit

BC Deep West

Hole # Intersection

1. 11 m @ 8.55 g/t Au

1. 10 m @ 10.93 g/t Au

1. 10 m @ 9.18 g/t Au

1. 6 m @ 11.41 g/t Au

1. 5 m @ 6.21 g/t Au
2. 4 m @ 5.04 g/t Au

Hole # Intersection

1. 7 m @ 6.86 g/t Au

1. 4 m @ 10.83 g/t Au

1. 4 m @ 4.86 g/t Au

Elizabeth Hill

1. 9 m @ 2.31 g/t Au

1. 2 m @ 2.46 g/t Au

Hole # Intersection

1. 7.3 m @ 4.52 g/t Au
2. 1.65 m @ 14.27 g/t Au

Phase 2 drilling is ongoing with encouraging results having been received since December 16th

Q4 2019 Results

11

New Luika exploration portfolio

• New discoveries on the mining licenses during the year (BC North, BC East, Elizabeth Hill North)
• Mineable reserves increased in 2019 net of depleted ounces with modest exploration expenditure
• Exploration spend to increase by 65% to US$5m in 2020

Producing/ replacement ounces

2019 on-mine discoveries/development

Regional Exploration

Reserves and resources

1.1m

ounces

		Luika
		Bauhinia Creek
	Elizabeth Hill	Shamba
	Illunga	Black Tree Hills
BC North	BC East	Elizabeth
Hill North
Lambo	Quartzberg	Porcupine South
Manyanya Matundasi	Itumbi

Q4 2019 Results

12

2020 priorities

• Safe Operational Delivery
  80-85k oz in 2020 at AISC of US$830-880 /oz

Exploration

• Reserve addition and mine life extension at New Luika 11,000 metres of drilling is planned

• Deleveraging
  Net cash balance sheet in 2020

Unlocking value

• Singida asset level financing
  (US$31 million NPV at Dec 2018 gold forward curve, based on spot gold price of US$1,225 /oz)

Q4 2019 Results

13

Near term catalysts and news

Date		Event
February 2020		2019 Full Year Results
October							June
February/ March 2020		Phase 2 drilling update from BC Deep
2018									2019
February/ March		2020		Updated		reserves		and resources
								deleveraging and
21 April 2020		Q1 2020 results:
				VAT update
April 2020		Repayment of convertible loan notes
Q1 & Q2 2020		Singida financing update
21 July 2020		Q2 2020 results

Q4 2019 Results

14

Appendix

Q4 2019 Results

15

Excellent safety: 44% improvement since 2017

TRIFR rate	Shanta highlights
(Total Recordable Injury Frequency Rate)
	 No fatalities
	 No LTIs
	 3.9 million hours since last LTI
4.38	 Industry leading safety record

1.78

1.13 1.00

ICMM	Shanta	Shanta	Shanta
5-yr avg	2017	2018	2019

Note: The International Council on Metals & Mining's (ICMM) members comprise 27 of the largest global metals & mining companies

Q4 2019 Results

16

Shanta is committed to Tanzania

• Over US$100 million contributed to the Government of Tanzania and >99% Tanzanian workforce
• Extensive CSR programme across all major disciplines
• Strong and open relationships with Senior Government Ministers

Payments to government1,2 (US$m)

1919

18

15

13

12

9

2013

2014

2015

2016

2017

2018

2019

1. Includes corporate income tax, employment taxes, statutory contributions, service levies, royalties. Excludes VAT receivable
2. Audited figures (except for 2019)

Tanzanian employee base (%)

99 99

98

96

93

92

91

2013

2014

2015

2016

2017

2018

2019

Q4 2019 Results

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