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Final results for the year to 31 December 2008
23 June 2009
The Board of Shanta is pleased to announce its audited results for the year ended 31 December 2008.
Chairman’s address to shareholders
The turmoil in the financial markets has been the overriding feature of the past months. Equity markets the world over have been ravaged and resources stocks in particular – majors and juniors alike – have been badly hit by the continued uncertainty and in many cases, even panic.
Against this background we at Shanta have remained focused on the business at hand. As a junior gold exploration company, with a portfolio comprising a number of advanced and encouraging prospects in a highly prospective region of the African continent, we are perhaps better placed than most to ride out the storm.
In what is likely to be a difficult funding environment for exploration companies, at least in the medium term, we have taken a proactive management approach to reviewing the way we fund our exploration which remains at the heart of our business. This approach is guided by a Board commitment to ensure that the Company has sufficient cash to conduct business until markets recover and the funding environment is more favourable.
Our primary goal of increasing shareholder wealth by adding value to our exploration holdings through a strategy of successful exploration aimed at generating economic returns remains in place, and will be underpinned by the following key outcomes of our strategy review:
- We will continue to work at increasing our resource base – albeit at a slower pace;
- Embarking on early-stage pre-feasibility studies to advance selected projects with a view to establishing one or more small to medium-sized operations on the basis of a combination of internal cash and project financing;
- Commissioning one or more operations to provide a cash flow funding source for exploration projects;
- Sourcing additional funds to continue exploration activities when the market supports a share price at suitable valuations, and possible alternative funds through joint ventures or the like.
We are cognisant of the need for a clear and unambiguous relationship with our shareholders as the Company will require additional funding in order to sustain its going concern status. We believe that the increase in our resource base has increased our financing options. To deliver the required funding, we will need to consider alternative methods including strategic partnerships, possible asset sales, small scale mining and approaching the market for funds.
At our advanced Singida project in central Tanzania and in the south at Chunya we have completed reverse circulation and diamond drilling programmes which rendered encouraging results and have been included in preliminary resource calculations. Our target of a compliant gold resource of 1 million ounces at each of these sites is a realistic one, with JORC compliant resources currently calculated at 1,032,000 and 846,000 ounces respectively at a 0 g/t cut off. The resource estimates have been increased to these levels with the 2008 drilling programme of 5,000 metres at Singida and 7,000 meters at Chunya and at a cumulative average cost per resource ounce of $8.26 per ounce since the inception of these projects. The average cost per ounce for the increased resources during 2008 was $3.24. We will be keeping shareholders informed of progress as we move these projects up the value curve.
Interface with the Ministry of Mines and Energy has been ongoing over the past year. Ownership of Mgusu is not in question, however, the presence of illegal artisanal miners with no alternative means of livelihood, and their militant attitude precludes safe access to the project. We continue to cooperate with the authorities, who have clearly advised us of their desire to resolve the issues.
In implementing our revised strategy the Board has appointed Mr David Scott as executive director. Mr Scott’s wealth of experience in geology, technical project management in Tanzania, specifically at the Bulyanhyulu mine, will serve us in good stead as we embark on early-stage mining activities.
The Board’s overriding concern and emphasis in the new financial year will be on cash preservation. Of the $6.40 million cash balance at the year end, the Company plans to spend $3.82 million leaving a balance of cash available of $2.58 million at the end of 2009. The cash conservation approach will inevitably result in reduced expenditure levels to support our strategy outlined above. The success of the strategy, combined with the pace and extent of global market recovery, will inform our expenditure programme in the longer term.
My thanks are extended to my fellow directors and our staff in the field for their support and extra efforts on the ground in what has been a difficult year. Going forward, into an uncertain global economic environment, I will continue to be guided by their sage judgement.
Financial Results
These are not the Company’s financial statements, however, all figures are based on the audited financial statements.
Consolidated results for the Company have been prepared in accordance with International Financial Reporting Standards.
| Year ended 31 December 2008 | 2008 | 2007 |
|---|---|---|
| US$000 | US$000 | |
| Revenue | – | – |
| Cost of sales | – | – |
| Gross profit | – | – |
| Other operating income | – | – |
| Administration expenses | (2,130) | (2,028) |
| Exploration costs | (4,572) | (3,568) |
| Operating loss | (6,702) | (5,596) |
| Finance income | 222 | 660 |
| Loss before taxation | (6,480) | (4,936) |
| Taxation | – | – |
| Loss for the year | (6,480) | (4,936) |
| Basic loss per share (US cents)1 | (6.45) | (5.02) |
1 Based on 100,469,938 weighted average shares in issue (2007: 98,633,224)
| As at 31 December 2008 | 2008 | 2007 |
|---|---|---|
| US$000 | US$000 | |
| ASSETS | ||
| Non current assets | ||
| Goodwill | 3,318 | 3,318 |
| Intangible assets | 1,362 | 1,446 |
| Plant and equipment | 305 | 444 |
| 4,985 | 5,208 | |
| Current assets | ||
| Trade and other receivables | 174 | 315 |
| Cash and cash equivalents | 6,404 | 12,392 |
| 6,578 | 12,707 | |
| Total Assets | 11,563 | 17,915 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Share capital | 18 | 18 |
| Share premium | 31,779 | 31,715 |
| Share option reserve | 1,337 | 1,384 |
| Shares to be issued | 8 | – |
| Warrant reserve | – | 306 |
| Translation reserve | 400 | 400 |
| Retained earnings | (22,539) | (16,568) |
| Total Equity | 11,003 | 17,255 |
| Current Liabilities | ||
| Trade and other payables and accruals | 224 | 324 |
| Loans payable to related parties | 336 | 336 |
| Total Liabilities | 560 | 660 |
| TOTAL EQUITY AND LIABILITIES | 11,563 | 17,915 |
| Year ended 31 December | 2008 | 2007 |
|---|---|---|
| US$000 | US$000 | |
| Net cash flows from operating activities | (5,575) | (4,912) |
| Investing activities | ||
| Purchase of plant and equipment | (59) | (159) |
| Purchase of intangible assets | (343) | (249) |
| Net cash flows from investing activities | (402) | (408) |
| Financing activities | ||
| Proceeds from the issue of ordinary share capital | – | 2,159 |
| Loans repaid | – | (5) |
| Net cash flows from financing activities | – | 2,154 |
| Net (decrease)/increase in cash and cash equivalents | (5,977) | (3,166) |
| Cash and cash equivalents at the beginning of year | 12,392 | 15,546 |
| Foreign exchange adjustment | (11) | 12 |
| Cash and equivalents at the end of year | 6,404 | 12,392 |
| Year ended 31 December | ||||||||
|---|---|---|---|---|---|---|---|---|
| Share Capital | Share Premium | Share Option Reserve | Shares to be Issued | Warrant Reserve | Translation Reserve | Retained Earnings | Total Equity | |
| Total Equity as at 31 December 2006 | 17 | 29,557 | 1,148 | – | 306 | 400 | (11,798) | 19,630 |
| Loss for the year | (4,936) | (4,936) | ||||||
| Total recognised income and expenses | (4,936) | (4,936) | ||||||
| Shares issued | 1 | 2,158 | 2,159 | |||||
| Share option costs | 402 | 402 | ||||||
| Share option expired | (166) | 166 | ||||||
| Total equity as at 31 December 2007 | 18 | 31,715 | 1,384 | – | 306 | 400 | (16,568) | 17,255 |
| Loss for the year | (6,480) | (6,480) | ||||||
| Total recognised income and expenses | (6,480) | (6,480) | ||||||
| Shares based payments | 64 | 64 | ||||||
| Share option costs | 156 | 156 | ||||||
| Shares to be issued | 8 | 8 | ||||||
| Share option expired | (203) | 203 | ||||||
| Warrants expired | (306) | 306 | ||||||
| Total Equity as at 31 December | 18 | 31,779 | 1,337 | 8 | – | 400 | (22,539) | 11,003 |
Notes to the financial statements at 31 December 2008
Accounting Policies
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS").
Statutory Accounts
The financial information set out in this preliminary announcement does not constitute statutory accounts. The figures included in the above statements are an abridged version of Shanta's audited results for the year ended 31 December 2008.
Shareholders' attention is drawn to the emphasis of matter in the Auditors' Report and the going concern disclosures in note 4 to the financial statements in the annual report and accounts for the year ended 31 December 2008. The auditors' opinion was not qualified in this respect.
Annual Report
The Annual Report, containing detailed information in relation to matters in this announcement will be sent to shareholders following this announcement and will be available for viewing on the Company’s website: www.shantagold.com. Additional copies will be available to the public, free of charge, from the Company's registered office at Suite A, St Peter Port House, Sausmarez St, St Peter Port, Guernsey, GY1 2PU.
Annual General Meeting
The Company's Annual General Meeting will be held on Wednesday 29 July 2009 at 10.00 at Suite A, St Peter Port House, Sausmarez Street, St Peter Port, Guernsey.
Contact:
Shanta Gold Limited
Walton Imrie
Mobile: +27 (0) 82 444 2851
Walter Vorwerk
Mobile: +27 (0) 83 308 0080
Fairfax I.S. PLC
Ewan Leggat / Laura Littley
+44 (0)20 7598 5368
