Shanta Gold enters into forward contracts amid volatile gold prices

29th Apr 2013 09:38

Shanta Gold has entered into forward sale contracts for more than 30,000 ounces (oz) of gold to be delivered by year end.The company said given the volatility of gold prices and its capital expenditure to achieve production targets, it felt it was necessary to commit to a number of forward sale contracts over part of the 2013 anticipated production. The group has cash equivalents of $21m and expects capital spend of $7.0m, mostly in the second half of 2013, to achieve its exploration goals, updating the Singida feasibility study and to attain anticipated levels of production at New Luika Gold mine in Tanzania.Shanta sold 10,192 oz of gold in the first quarter, generating $16.6m in revenue.The company's new forward sale contracts equate to 43% of the forecast 2013 annual production. The contracts were secured at an average price of $1,429 per oz. "Shanta in principle does not favour hedging/forward sales unless, as in this particular situation, it is put in place to provide stability during an important period in the company's development," said Chief Executive Officer, Mike Houston. "We continue to put the necessary building blocks in place to ensure the stability and growth of this exciting asset."RD