JOHANNESBURG (miningweekly.com) – East Africa-focused Shanta Gold has cancelled its proposed £3.5-million buyout of TSX-V-listed Helio Resources.
The transaction, which was announced in June, would have given Shanta control of Helio’s assets, adjacent to its own New Luika gold mine, in Tanzania.
Shanta attributed the termination of the agreement to the potential impact on Helio of new mining legislation in Tanzania.
“Accordingly, having taken professional advice and upon due consideration, Shanta Gold will not be acquiring all of the issued and outstanding common shares of Helio as previously announced,” it said on Friday.
As a result of the new legislation, Shanta’s gold shipments have, from July, attracted higher royalty rates of 6%, compared with the previous 4%.
The company will continue to seek advice on the legislation and its potential impact and will provide updates as appropriate.
Meanwhile, the company on Friday also reported earnings before interest, taxes, depreciation and amortisation of $52.7-million for the six months ended June 30.
Shanta pointed out that 56 268 t of ore were mined in the six months under review, with gold production for the first half of the year at 40 073 oz. The mine remains on track to meet the full-year production guidance of between 80 000 oz and 85 000 oz.
CEO Eric Zurin said progress at the New Luika mine had progressed well.
“Underground development has now reached 4.4 km in just over 13 months. The transition to the underground mine remains on track and continues to be derisked as more stopes are opened and critical equipment arrives at site,” he added.
During the period under review, gold reserves increased from 2.66-million tons at 5.93 g/t for 506 000 oz to 3.64-million tons at 4.40 g/t for 515 000 oz.
The company also reported forward sales from July to December of 37 000 oz at an average price of $1 278/oz.