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Shanta upbeat on Tanzanian prospects
Source: Business Day
Publication: All Africa Global Media
21 July 2005
Tanzania's relatively developed infrastructure, investor-friendly mining laws and a tax regime comparable to SA's offer a favourable environment for mining exploration companies, executives of recently listed Shanta Gold said last week.
Shanta had prospecting licences over a substantial quantity of land in Tanzania, chief financial officer Walter Vorwerk said, and management's task would be to turn it from prospective into proven.
"We have a strong idea that there is something on every piece of land we hold," he said.
Tanzania is the third-largest gold-producing country in Africa after SA and Ghana.
Companies active in the country in either exploration or mining include AngloGold Ashanti, Randgold Resources, Gold Fields, Placer Dome and Barrick Gold.
CEO George Bennett said although Tanzania's infrastructure was less developed than SA's, it was considerably better than Angola's or Mozambique's. Despite the remoteness of some of the Shanta projects, there is an extensive network of tarred roads serving most areas.
As far as the regulatory regime is concerned, Tanzania's mining code is based on Australia's, which means royalty fees are 3%.
Bennett said the Tanzanian government did not insist on having a stake in mining projects and had no empowerment charter.
Companies are encouraged to use local staff and Shanta is using some Tanzanian geologists.
There is little in the way of formal trade unions.
The company tax rate is 37% and value-added tax is 14%.
Although African countries are frequently criticised for high levels of corruption, Bennett said corruption can be found in any country in the world and Tanzania ranks similarly to SA or Botswana in corruption studies.
Shanta Gold, which listed on the London Stock Exchange's Alternative Investment Market on July 11, has three main subsidiaries: Mgusu Mining, Shanta Mining Company and Nsimbanguru Mining.
Mgusu Mining is a project in the northwest of Tanzania, where it is estimated that the total resource is 741000oz at 3,7g/t. Shanta expects to spend $1,1m on exploration at Mgusu in the coming year.
Shanta also has another project in central Tanzania -- which could contain more than 300000 ounces of gold -- where it is spending $400000 on drilling and testing.
It also has three projects in the Musoma district in the north of Tanzania. The company has acquired prospecting licences in four other areas, including one where there is a joint-venture agreement with Canada-based Placer Dome.
The total to be spent on prefeasibility studies and exploration is estimated at $3,1m for the first year and a three-year exploration programme is likely to follow, which will require further funding.
Shanta's directors are based mainly in SA.
Bennett said even though Shanta's operations were Tanzanian and were focused on gold, it had listed in London because the South African market has little appetite for mining exploration.
The company was established three years ago and has spent about $5m on exploration to date. It listed to raise funds to take it to the next stage.