Shanta Gold, whose sole current producing asset is the New Luika gold mine in the Lupa goldfield of Tanzania, will soon have a second gold mine – Singida – up and running. Mining Review Africa contributing editor ARTHUR TASSELL recently spoke to Shanta’s CEO, ERIC ZURRIN, to learn more about Singida, which will be the first commercial-scale gold mine to be constructed in Tanzania in 10 years.
Located in the Ikungi District of the Singida region of Central Tanzania, Singida will initially be a considerably smaller operation than New Luika with a projected annual life of mine (LOM) gold production of 32 000 oz at an all-in sustaining cost (AISC) of US$950/oz over an initial mine life of seven years.
By comparison, New Luika is expected to produce between 68 and 76 000 oz in 2022 at an AISC of $1 150-1 275/oz. Construction of Singida is already over three-quarters complete (as of mid-October 2022) and the project is on course to pour its first gold in Q1, 2023.
Once its production is added to New Luika’s, AIM-listed Shanta will be a plus 100 000 ozpa producer. This figure could rise still further, as Shanta is also working hard on advancing its exceptionally high-grade (+11 g/t) West Kenya project, acquired from Barrick two years ago, which already has a 1.5 Moz resource in place. Zurrin says Singida has great potential to grow.
“Singida is located within a greenstone belt which has been subjected to very little exploration, so clearly there is an excellent chance that we will find additional resources,” he says.
“In addition, only 26% of current resources are included in the existing LOM plan. Most of our reserves are within 150 m of surface, so there is also plenty of scope for reserve expansion at depth.”
Shanta is so confident that it will expand the resource base at Singida that it has taken the decision to size the project for expansion by installing a much bigger crusher than the operation will initially need and by over-sizing the tailings facility. Although Singida has been in Shanta’s portfolio for many years, the decision to develop it was only taken two years ago.
As Zurrin says: “Going back around 15 years, Shanta had both Singida and New Luika in its portfolio. As a junior, the company didn’t have the resources to develop both projects simultaneously, so it concentrated its efforts on New Luika, which entered production in late 2012.”
Shanta remained active on Singida – even when it was devoting most of its energies to New Luika – producing an initial resource estimate in 2008, a PFS in 2010, a feasibility study in 2014 and a technical report in 2017. In 2018, it initiated fresh exploration and infill drilling on the project; while in 2019 it explored the possibility of an IPO on the Dar es Salaam Stock Exchange to finance Singida’s development (although this approach was not ultimately adopted).
“By 2020 we had come to the conclusion that Singida was an asset of real value that should be progressed through to development,” says Zurrin. “The board approved the project and in October 2020 we were able to report that we had updated the project economics and that we were starting construction work on the mine, with the investment being funded from internally generated cash flow.”
The update of the project economics produced some attractive figures: a LOM free cash flow of $94 million, a post-tax NPV (8%) of $56 million and an unlevered post-tax IRR of 49% using a LOM gold price of $1 700/oz. The capital cost was estimated at $36.8 million (including stripping costs of $10 million) with payback expected within 40 months.
“We have managed to stay within our project budget quite comfortably, which reflects the fact that we ordered the ‘big ticket’ items quite early on before the global inflation that we’re currently seeing take hold,” notes Zurrin.
“The ball mill, for example, was ordered in late 2020 and the crusher in early 2021. We now estimate the project capex at close to $40 million – somewhat higher than the figure we originally envisaged – but this is mainly accounted for by our decision to oversize some of the project infrastructure. The bigger crusher is costing us an extra $0.6 million and the bigger tailings facility an extra $2 million.”
Singida will be an open pit operation exploiting a mineral resource of 11.8 Mt at a grade of 2.38 g/t (equating to 904 000 oz of contained gold). The probable ore reserve totals 243 000 oz at 3 g/t. There are currently seven identified gold deposits over 5 km of strike, with three of them (Gold Tree, Cornpatch West and JEM) accounting for the bulk of reserves. The mining will be a conventional load-and-haul operation undertaken by an all-Tanzanian company that also undertakes the open pit mining at New Luika.
The average strip ratio over the LOM will be about 14 : 1. The mining contractor moved onto site earlier this year and by the end of July had excavated the Gold Tree pit, which will ultimately be 150 m deep, to a depth of 15 m, and mined 2.5 Mt of material for use in the construction of the tailings storage facility.
Ore stockpiled for treatment in the process plant is building up steadily and by late September there was an estimated 9 000 oz of contained gold in the stockpile. The ore – which is entirely nonrefractory – will be treated in a straightforward CIL plant (although there will be some gravity recovery) designed to treat 365 000 t of ore annually. It is anticipated that it will achieve a recovery of 91%.
As mentioned, the crusher is larger than required, with a capacity of 2 500 tpd, while the site footprint also allows for an additional ball mill and two additional leach tanks. In contrast to New Luika, the flowsheet also includes a thickener.
In designing and building Singida, Shanta has elected not to go the EPC or EPCM route but is relying instead on the in-depth expertise it has in-house, built up over years of operating at New Luika, combined with partnerships with key OEMs – notably South Africa’s NCP for the gravity and grinding circuit, Metso for the crushing circuit, and Australia’s Como Engineers for the elution circuit and gold room. The crusher has already been installed on site and cold commissioned while the grinding circuit installation is currently underway with commissioning expected by year end. “We have good relationships with all these companies,” says Zurrin.
“NCP, for example, has supplied and maintained all the New Luika mills, so we’ve worked with them for a decade. We’ve been satisfied with their performance which is why we’re using them for Singida.”
He adds that all the major plant items for the project are brand new with no refurbished equipment being used.
Employment and livelihoods are all-in for Tanzania
In implementing Singida, Shanta is making minimal use of expatriates. “The management of Singida and the workforce deployed on the project are 100% Tanzanian and are doing a fantastic job. Our project team is led by Jiten Divecha, Singida’s GM, who prior to joining Shanta was capital projects manager in Tanzania for Acacia Mining and then its successor, Barrick.
“He is supported by Kundael Ntiro, who was for many years with DRA and who has had a major input into the plant design. The only expatriates on site are those who come in with the OEMs on a short-term basis,” says Zurrin.
The policy of employing almost exclusively Tanzanian citizens was introduced by Zurrin after he became Shanta’s CEO in 2017. “Our workforce is now 99.5% Tanzanian, while our management in Tanzania, including both our GMs, is totally Tanzanian,” says Zurrin.
“This is a policy we’ve never regretted, and it really helped us during the COVID-19 pandemic as we had none of the issues that many other African mining companies experienced due to travel restrictions that made it difficult for expatriates to get to site. Our indigenisation policy means we are one step closer to the communities and local stakeholders within country.”
Singida will have a major impact on the local economy in the Ikungi region, which is mainly based on agriculture at present. Already the project is providing employment for over 300 people, mostly recruited locally, while the permanent workforce, once the mine is operational, will number around 300, also mostly from local communities. In addition to employment opportunities, the mine will source the bulk of its supplies locally.
Shanta is also starting to implement a vigorous CSR programme that will focus on improving economic livelihoods, education, health and water for communities around the mine, drawing from its huge experience with a similar programme that is running at its New Luika operation.
According to Zurrin, the Tanzanian government has given its whole-hearted support to Singida. “From the state’s perspective, this is a very important project as it is not only the first gold mine to be built in Tanzania in 10 years but is pretty much the only mine of any type to have been developed over this time frame, with the exception of one fairly small graphite mine that is currently under construction,” he says.
“We had a construction opening ceremony last year, which was very well attended by government representatives.”
Summing up the benefits of Singida to Shanta, Zurrin says the project is an important milestone in the company’s journey towards becoming a diversified mid-tier gold producer.
“It takes us up to more than 100 000 oz of yearly gold production but potentially we’re looking at doubling this, as the West Kenya project – according to the scoping study we’ve completed on it – could produce another 100 000 ozpa or more,” he says.
“Shanta is definitely on a growth path and we’re very excited by the company’s prospects.”
