Shinhan Financial Group Co Ltd Annual Report 2021

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FY2021 Annual Report · Shinhan Financial Group Co Ltd

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2021

Annual Report and Financial Statements

Contents

About Shanta Gold

Board of Directors

Chairman’s Statement

Chief Executive Officer’s Review

Directors’ Report

Corporate Governance Statement

Remuneration Committee Report

Risk report

Sustainability Committee Report

Audit Committee Report

Independent auditor’s report to the members of
Shanta Gold Limited

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the financial statements

Notice of the Annual General Meeting

Form of proxy

Notes to the proxy form

ABOUT SHANTA GOLD

About Shanta Gold

Shanta Gold is an East Africa-focused responsible gold
producer, developer, and explorer. The Company has
an established operational track record, with defined
ore resources on the New Luika and Singida projects in
Tanzania, with reserves of 666 koz grading 3.04 g/t, and
exploration licences covering approximately 1,100 km2 in
the country.

Alongside New Luika and Singida, Shanta also owns the
West Kenya Project in Kenya with defined high grade
indicated and inferred resources and licences covering
approximately 1,162 km2. Shanta is quoted on London’s
AIM market (AIM: SHG) and has approximately 1,048
million shares in issue. For further information please visit:
www.shantagold.com.

These financial statements are consolidated financial
statements for the Group consisting of Shanta Gold Limited
and its subsidiaries. A list of major subsidiaries is included
in note 14.

Country of incorporation
Guernsey

Nature of business
East Africa-focused gold producer,
developer and explorer

Company registration number
43133

Registered office
11 New Street
St Peter Port
Guernsey GY1 2PF

Secretary
Vistra Fund Services (Guernsey) Limited
11 New Street
St Peter Port
Guernsey GY1 3EG

Auditor
BDO LLP
55 Baker Street
London W1U 7EU

Nominated advisor and broker
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY

Joint Broker
Tamesis Partners LLP
125 Old Broad Street
London EC2N 1AR

Website
www.shantagold.com

Annual Report and Financial Statements 2021

ABOUT SHANTA GOLD

BOARD OF DIRECTORS

Board of Directors

Anthony Durrant
Non-executive Chairman

Eric Zurrin
Chief Executive Officer, Director

Luke Leslie
Chief Financial Officer, Director

Mr Durrant has had a long and
distinguished career in the
global natural resources sector,
having formerly been the Global
Head of Metals & Mining at UBS
Investment Bank. He is currently
Chairman of the Investment
Advisory Committee of Arias
Resource Capital Management,
which manages private
equity funds investing in Latin
American mining. Mr Durrant
brings significant experience
in capital markets and natural
resources. Mr Durrant has long-
standing links to East Africa.

Eric Zurrin has 20 years’
experience in mining and
investment banking including
previous roles with UBS
Investment Bank and BMO
Capital Markets. Eric has worked
and lived in North America, the
UK, Asia and Africa and held
senior positions in advisory,
private equity and operational
roles. Eric is a Canadian national
and a graduate of Harvard
Business School.

Luke is a mining investor with
a background in Mergers &
Acquisitions. He was formerly
a member of UBS Investment
Bank’s Corporate Finance team
based in London. Luke began
his career as a management
consultant with Accenture
where he specialised in post-
acquisition integration and cost
reduction strategies.

Annual Report and Financial Statements 2021BOARD OF DIRECTORS

Ketan Patel
Non-executive Director

Keith Marshall
Non-executive Director

Michelle Jenkins
Non-executive Director

Mr Patel was a founder of Shanta
Mining Company Limited (now
a subsidiary of Shanta Gold) in
2001 and chairs the Company’s
Sustainability committee. He
has worked extensively in
trading organisations in the
UK and since 1986 has traded
agrocommodities internationally.
Mr Patel has extensive
commercial interests in Tanzania
and is a senior director of Export
Holdings (Pty) Ltd and Managing
Director of the Sea Cliff and
White Sands Hotel in Dar
es Salaam.

Mr Marshall is a mining engineer
with over 35 years’ experience
in the sector enabling him to
accumulate a wealth of technical
and managerial expertise with
the last fifteen years spent in
senior mine leadership roles. Mr
Marshall is currently an non-
executive director of SolGold.
His previous operational roles
were with Rio Tinto, with whom
he has worked for 22 years,
as Managing Director of the
Palabora Mining Company in
South Africa and as President
of the Oyu Tolgoi Project
in Mongolia. He chairs the
Company’s Remuneration
committee.

Ms Jenkins is a Chartered
Accountant (South Africa)
and an exploration geologist
with an Honours degree in
Geology from the University of
Witwatersrand, South Africa. Ms
Jenkins has 25 years’ experience
in the mining sector during
which time she has accumulated
a wealth of technical and
managerial expertise. Ms
Jenkins has extensive experience
across Africa including currently
as the Executive for Finance and
Administration (South Africa)
for Orion Minerals Ltd and as
a Non-Executive Director of
Kumba Iron Ore Limited. Ms
Jenkins previously worked for
the Pangea Group.

CHAIRMAN’S STATEMENT

Chairman’s Statement

Whilst 2021 posed some challenges to Shanta, the Group
did well to finish the year in line with our revised production
guidance. The robust fundamentals that underpin the
Group’s operations ensured that we ended the year with
a strong balance sheet, an outstanding safety record
for the fourth year in a row, and having completed the
largest exploration programme ever conducted in the
Group’s history.

I am also pleased to announce that our first standalone
annual Sustainability Report for 2021 was recently
published and reports on the sustainability issues that are
most important to both our stakeholders and the wider
business community. This year was important for the Group
in terms of our Environmental, Social and Governance
(“ESG”) goals, with Shanta achieving key milestones
including benchmarking our current position against peers,
starting to report our Scope 1 and 2 greenhouse emissions,
and mapping a path forward towards decarbonising our
operations.

I would like to take this opportunity to extend my welcome
to Michelle Jenkins who joined the Board of Shanta Gold
Limited in May 2021. We believe Michelle’s experience
in exploration and mining finance across Africa brings a
complementary skill set and will be of considerable value
as the Company continues to develop its portfolio in East
Africa. I would also like to .thank all of our employees for
their continued commitment and hard work over the last
year, without which, these achievements would not have
been possible.

Performance and operating highlights
For the third consecutive year, we replaced all annually
mined ounces and extended New Luika’s mine life to at
least the end of 2026 following a successful exploration
campaign that included recent discoveries at the Porcupine
South deposit. After the introduction of a third mill at
New Luika during the year, Shanta achieved record annual
throughput of 834,607 tonnes milled. The Group also
reduced its gross debt to US$2.4 million, following the
repayment of the US$10 million convertible loan note in
April 2021, further strengthening our financial position.

Portfolio developments
The Singida Mine construction remains on track for
first production in Q1 2023, adding a second revenue
stream across the portfolio and further strengthening our
diversified portfolio of assets in East Africa. We remain
committed to growing and further defining our portfolio
as evidenced by the largest exploration programme ever
carried out by the Group at the West Kenya operations in a
year which delivered consistently encouraging high-grade
drilling results, including spectacular visible gold. As a
result, we are confident of our ability to transform Shanta

to a 100,000+ oz/p.a. producer in 2023 and deliver further
sustainable returns to our shareholders.

Creating new opportunities for our communities
Developing the education, health and employment
prospects of local communities that neighbour our
operations was a core priority of Shanta’s community
development programme in 2021. The Group supported
various schools and pupils with the provision of much
needed infrastructure and supplies. Due to the Group’s
various water projects carried out during the year, a
further 7,600 local residents now have access to clean
running water. Furthermore, through additional projects
designed to better the employment prospects of our local
communities, approximately 2,000 farmers in Tanzania and
100 previously unemployed youths can now look forward to
the opportunity to earn year-round income.

Apart from directly investing in our community engagement
programmes, Shanta’s contribution to the Tanzanian and
Kenyan economies through our operations have been
significant, totalling US$123.1 million in 2021. Shanta
maintains an excellent relationship with district, regional
and national levels of the Tanzanian Government. For the
year 2021, Shanta was awarded three first place awards
at the national level of government for Local Content
Performance, Outstanding Performance in CSR Projects,
and Environmental and Safety Issues Compliance.

Year ahead
2022 is set to be an exciting year for the Group. Our
ongoing exploration programme will play an important
role in sustainably extending and adding to Shanta’s
production profiles over time, maximising the social impact
of our assets on the ground and improving returns for
shareholders. We’ve announced increased production
guidance of 68,000 – 76,000 oz for 2022, with production
weighted towards the second half of the year once
mining of the high-grade Bauhinia Creek crown pillar has
commenced. Construction at the Singida Gold Mine will
largely be completed in 2022 with significant milestones
being reached in the second half of 2022 and first pour in
Q1 2023. Once gold production commences at Singida,
we are confident that the project will help transform the
Ikungi region in Central Tanzania for the benefit of the
local communities whilst also de-risking the business
from a financial and operational perspective as the
Company begins generating significant cash flow from two
independent operations.

Anthony Durrant
Chairman

9 May 2022

CHIEF EXECUTIVE OFFICER’S REVIEW

Chief Executive Officer’s
Review

Despite some operational challenges
faced in 2021, Shanta is pleased to
have closed out the year in line with
the revised guidance and forecasted
production growth for 2022.

We have replaced all mined ounces at New Luika, delivered
some exceptional high-grade results in our West Kenya
drilling programme, continued our leading health and
safety record, and made good progress at Singida.

With the Group’s robust business fundamentals providing
a strong platform from which to grow, we go into 2022
excited at the opportunities in front of us, particularly the
near-term opportunity to transform into a 100,000+oz/p.a.
producer, which we are confident will happen in Q1 2023
following first gold pour at Singida.

Most importantly, Shanta continues to create a net-positive
impact for its stakeholders and communities in Tanzania
and Kenya. Our focus on sustainability and ESG during
2021 has been a highlight this year, ensuring the Company
is more accountable, transparent, and responsible in
its corporate purpose. This commitment to first class
governance has been further enhanced in Q1 2022 when
we released our inaugural sustainability report.

Highlights

Exceptional safety record
This year, once again, Shanta delivered an outstanding
safety record with an incredible milestone achieved of
over 8.0 million man-hours passed without a Lost Time
Injury (“LTI’s”). The Company has now operated for over
four years without an LTI, earning itself a reputation as
one of the safest mining operations worldwide. The
Group also achieved a Total Recordable Injury Frequency
Rate (“TRIFR”) per 1 million hours worked of 0.67, a sixth
successive annual decline in injuries and significantly below
the global industry average of 2.94, as measured by the
International Council of Mining and Metals.

Building the Singida Gold Mine
The construction of the Singida mine is progressing on
schedule. Several major project milestones have now been

completed on site with construction at approximately 45%
completion. Total capital expenditure at Singida during
2021 amounted to US$10.9 million and the project remains
on track for first production in Q1 2023, transforming
Shanta Gold into a +100,000 oz/pa producer with a
diversified resource base.

The project also has considerable upside potential given
its location within a greenstone deposit, meaning it is well
suited to further exploration growth. Future drilling planned
for 2022 will target areas within these mining licenses with
the aim of extending the reserves at Singida.

Shanta’s exceptional safety standards are being carried
through to its Singida operations with a robust health and
safety framework and zero LTIs since commencement of
construction.

The Singida Gold Mine directly employs 282 employees
and contractors, all of which are Tanzanian nationals,
further highlighting the Group’s commitment to developing
in country talent. We are confident that the project will
transform the Ikungi region once complete as we continue
to invest in community initiatives that benefit the people on
the ground. We are delighted to have already started this
process by investing in the upgrade of local schools in the
Malumbi and Samburu villages, as well as the improvement
of roads, numerous water projects, and renovation of a
local dispensary.

The West Kenya Project
During the year, an extensive drilling campaign was carried
out at West Kenya with the primary focus being to upgrade
the high-grade resource at Isulu and Bushiangala. Shanta is
pleased to have achieved this goal, successfully converting
117,000 oz grading 7.04 g/t Indicated at a conversion
rate of over 100% in 2021. To date, this is the most
consistently high-grade drilling campaign the Group has
ever conducted.

Success at West Kenya is a hugely exciting prospect for
Shanta and its stakeholders as the resource expands toward
a multi-million ounce gold district comparable with other
prolific greenstone belts in the world.

Looking forward to 2022, Shanta aims to continue to deliver
outstanding drilling results. A third drill rig has been added
to the operations as phase two of the campaign looks to
establish a Mineral Resource Estimate.

CHIEF EXECUTIVE OFFICER’S REVIEW

Portfolio-wide exploration
For a third consecutive year, Shanta has replaced all mined
reserves at New Luika, with 110,000 oz of new reserves
added in 2021. During the year, the Company invested
US$4.4 million in exploration at New Luika resulting in the
upgrading of approximately 80,000 oz grading 4.31 g/t
from Probable to Proven Reserve category, significantly
de-risking the 12-month production outlook. Reserve-based
mine life at New Luika has been extended again, now
to the end of 2026. JORC compliant reserves across the
Group increased by 20,000 oz to 645,000 oz at a grade of
3.04 g/t. Shanta’s reserves assume a long-term gold price
of US$1,350 /oz.

Off the back of the Group’s 2021 exploration successes, the
Board has approved a US$6.9 million Tanzanian exploration
budget for 2022.

VAT status on refunds
The Company’s VAT receivable was US$26.9 million at
the end of the year. Following positive engagement with
the Tanzanian Revenue Authority (“TRA”), US$7.2 million
was refunded. The remaining VAT receivable is subject to
verification audit before being available for further refunds
or offsets against corporate income tax. The Company has
taken extensive legal and tax advice to recover the VAT
and is pursuing the appropriate avenues to recover the full
balance as discussed in note 3.

Operations review

New Luika Operations Review
The Group faced some operational challenges at New
Luika during the year with lower than anticipated grades
being recovered and a faulty product received from a
supplier in the last quarter of the period. During the first
half of 2021, underground mining at the Bauhinia Creek
deposit intersected a structure that dragged and pinched
the ore zone for approximately 17 metres along strike at
the 600 level (360 vertical metres below the underground
portal) and approximately 37 metres at the 585 level.
This resulted in total ounces recovered for the year being
55,280 oz (2020: 82,978 oz). The processing plant, however,
continued to operate above its nameplate capacity with a
record annual throughput of 834,607 tonnes being milled,
following the installation of a third mill during the period,
7% greater than budgeted.

AISC1 for the year were US$1,439, higher than anticipated
as a result of less ounces being recovered. On an absolute
basis, mining cash costs stayed relatively flat with the
Group maintaining its ongoing efforts to rigorously review
and manage expenses.

Financial overview

Turnover for the year from sales of gold amounted to
US$103.6 million, compared to US$147.4 million in 2020.
The 29.7% decrease in sales was driven by the fall in gold
ounces recovered. The Company sold 57,517 oz of gold in
2021 (2020: 83,228 oz) and all sales were unhedged and
completed at spot price, with an average selling price of
US$1,801 /oz during 2021 (2020: US$1,495).

Operating profit for the year amounted to US$4.7 million
(2020: US$43.8 million), the decrease being mainly
attributable to the combination of less revenue earned in
the period, lower grades than anticipated being mined
resulting in higher production costs and the inclusion of a
full year of expenditure relating to the West Kenya Project.
EBITDA2 was US$19.0 million (2020: US$63.9 million).

Through successful negotiations with the Tanzania
Revenue Authority (“TRA”), total VAT refunds of US$7.2
million were received by the Group in 2021, with a further
US$4.3 million being verified for refund by the TRA in
January 2022.

During 2021, the Group repaid the US$10 million
convertible loan note reducing gross debt to US$2.4
million. The Group had an unrestricted cash balance
of US$13.2 million (2020: US$41.6 million) at year-end
with further available liquidity of 1,593 oz of unsold
doré on hand.

Sustainability
The Group published its inaugural stand-alone
Sustainability Report for 2021 which reports on the
sustainability issues that are most material to Shanta’s
stakeholders. ESG and Sustainability have risen to the top
of corporate agendas within both the mining sector and
the wider business community, and this report marks an
important stage in Shanta’s journey to greater transparency
and communication of how material ESG and sustainability
issues affect our business and what we are doing to
address these.

In 2021, the Group has continued to operate safely and
look after its team, develop local communities, manage its
resources and environmental impact, and act responsibly
and accountably at all times. The 2021 Sustainability Report
is available on the Shanta Gold website.

Managing Resources Responsibly and Mitigating
Environmental Impact

Managing our water supply
Mining activities require a large and consistent water
supply. This can be challenging in the Songwe region
where the year is divided into very wet and very dry

1 AISC figures published include development costs, in line with the WGC definition

2 EBITDA is earnings before interest, tax, depreciation, and amortisation which has
been derived as operating profit exclusive of depreciation/depletion of tangible
assets, amortisation of intangible assets.

CHIEF EXECUTIVE OFFICER’S REVIEW

New Luika Gold Mine
Operations Review

New Luika Gold Mine operations

Tonnes ore mined

Tonnes ore milled

Grade (g/t)

Recovery (%)

Annual Report and Financial Statements 2021CHIEF EXECUTIVE OFFICER’S REVIEW

Gold production (ounces)

Gold sales (ounces)

Silver production (ounces)

Realised gold price (US$/oz)

CHIEF EXECUTIVE OFFICER’S REVIEW

New Luika Gold Mine
Operations Review

New Luika Gold Mine quarterly breakdown

Tonnes ore mined

Tonnes ore milled

Grade (g/t)

Recovery (%)

Annual Report and Financial Statements 2021Gold production (ounces)

Gold sales (ounces)

Silver production (ounces)

Realised gold price (US$/oz)

CHIEF EXECUTIVE OFFICER’S REVIEW

seasons. As a result, we have developed a focused water
recovery program at New Luika which targets the recovery
of water used in tailings via a Return Water Dam. In 2021,
33% of water usage was recovered (2020: 31%). The team
at New Luika work closely with the Lake Rukwa Basin Water
Board to communicate water conservation strategies
in place, and Annual Water Reports are prepared for
the Board to monitor the status of water resources and
consumption. The Group remains committed to using water
efficiently and responsibly and continues to look for ways to
manage our consumption and find innovative solutions to
water supply.

Responsible tailings and waste management
Safe management of tailings and other environmental
issues are also crucial to the safety of our communities and
longevity of our operations. We were pleased that during
2021, as in 2020, there were zero reportable environmental
and community incidents, and no issues or regulatory
non-compliance were noted. While our record is strong
to date, we understand the risks associated with tailings
are a particular concern to our stakeholders and we are
determined to continue our focus on maintaining high
levels of safe management and avoid complacency.

Climate change
As a responsible gold miner, it’s important for the Group
to stay on top of the latest developments which affect our
industry and the expectations of our stakeholders. 2021 was
an important year in the wider landscape around climate
change with businesses making long term commitments to
combat their impact on climate change. For several years,
Shanta has been committed to efficient energy usage at
New Luika. This year, Shanta also calculated and reported
its Scope 1 and 2 Greenhouse Gas (“GHG”) Emissions for
the first time. We are proud of how we benchmark against
our peers, reporting one of the lowest GHG intensities per
ounce of gold produced. However, we recognise there
are important steps to take to make further progress in
decarbonizing our footprint and driving down emissions.

Putting our People First
The Group’s achievements in the year are directly linked
to the efforts of its workforce working together with the
same goal in mind, embracing opportunities and staying
motivated during a year that had its ups and down.

The Group’s headcount, including employees at New Luika,
Singida and West Kenya Project, totalled 953 people at
the end of 2021 (2020: 764 people) and our Tanzanian staff
span every discipline. The Executive Committee and Board
of Directors of SMCL are led almost entirely by Tanzanian
nationals.

demonstrates the importance of our operations as a major
employer for nearby villages and towns, driving the local
economy in an area that continues to suffer from high
unemployment and economic difficulties.

Community Investment
For many years Shanta has been a supporter of the social
and economic development of the communities located
near its operations, and this remained the case in 2021.

During the year, the Group continued to support local
business with more than 80% of Shanta’s procurement
being sourced from local suppliers for the New Luika
and Singida operations in Tanzania. Similarly, over 60%
of procurement for the Company’s Kenyan exploration
activities are from local suppliers.

Shanta has a well-established CSR programme which has
been developed through the implementation of community
initiatives that are devised with the direct engagement
of key community and regional stakeholders. Water,
Education, Livelihood and Health represent the core pillars
to Shanta’s community investment projects. The projects
are focused on the local communities surrounding the New
Luika, Singida and West Kenya operations.

Some of the projects the Group carried out in 2021 are
mentioned below:

Education
Over the years, Shanta has believed that quality education
is critical in developing local communities and bringing
about long-term change.

Shanta has been offering a sponsorship programme for
underprivileged students since 2014, and in 2021 a further
55 Secondary School and 120 Primary School students
from underprivileged families were provided with uniforms,
shoes and stationary. This support by Shanta will allow
these students to attend school.

The Company continued its work on making ICT equipment
and learning available during the year by commencing
work on a computer lab at Saza Secondary School following
the construction of their computer lab in 2020.

Also, as part of the Group’s initiative to improve educational
infrastructure in the area, in 2021, Shanta invested in an
ablution block and three classrooms at Saza Primary School,
and two classrooms at Patamela Primary School. Upgrading
these facilities allows the school to attract the best teachers
who are typically put off by the difficulty of teaching with
poor infrastructure and accommodation.

At the end of 2021, 99% of the Group’s workforce were
from our host countries Tanzania or Kenya (2020: 99%)
and a significant amount of SMCL’s employees are from
local communities around New Luika and Singida. This

Water
Access to clean drinking water is a challenge for the
residents in the Songwe region which has unpredictable
rainfall and poor water infrastructure.

CHIEF EXECUTIVE OFFICER’S REVIEW

In 2021, Shanta invested in connecting the Luika River
Dam to Mbangala village via a 4km pipeline. This will
provide approximately 7,600 people with reliable, clean,
running water. This project was achieved with the help
of the community who were encouraged through the
advertisement of temporary work for residents in helping
trench the pipeline. 200 villagers took up the opportunity
and constructed the pipeline under supervision from
Shanta’s Community and Engineering department.

Livelihood
Farming or artisanal mining are key income generating
activities near Shanta’s New Luika, Singida and West Kenya
operations. The Group supports a range of livelihood
programmes to encourage and grow the economic
prospects of the local communities and provide an
alternate income generating opportunity to the often illegal
or dangerous artisanal mining operations.

At West Kenya, in partnership with KK Security Kenya Ltd,
Shanta has supported security guard training costs for
100 unemployed local youths from the project area. All
trained individuals have subsequently been offered formal
employment as a security guard in what was undoubtedly
one of Shanta’s most successful projects of the year.

In 2021, Shanta continued to support the Saza Village
Beekeepers group and funded the construction of a honey
processing plant which allows the group to increase the
volumes of raw honey they are able to process and thus use
or sell. The Group also invested in equipment (harvesting
gear and replacing worn out hives) and organized training
on beehive inspection, honey harvesting and marketing for
50 beekeepers to further the industry in the area.

Lastly, since 2016 Shanta commenced working with local
farmers near New Luika to develop modern farming
methods. This initiative aimed to introduce modern farming
methods to mitigate hunger, introduce commercial crops
which grow well in the community areas and find markets
for the crop, in addition to the formation of an Agriculture
Market Cooperative Society (AMCOS) that unites farmers
and creates a one stop centre for all activities related to
improving commercial farming and improving farmers
livelihood. The number of farmers now enrolled in the
programme has risen to more than 2,000 in 2021. During
the year, Shanta continued to support members of the
programme, providing training and donating fertilizer and
pesticides. The Group is proud to announce that in the
year, the sesame harvest which was the result of a number
of years’ work with the community yielded 1,500,000 kg,
which at a price of $1 per kilogram meant $1.5 million
was distributed directly back into the scheme to support
the other needs of the farmers and their communities,
including schooling, general wellbeing, and family and
medical needs.

Health
The availability of heath infrastructure and services in rural
Tanzania and Kenya continues to be a social challenge
and the main cause of long-term health issues in the
communities.

Shanta partnered with the PharmAccess Foundation and
AMREF to support the Innovative Partnership for Universal
Sustainable Healthcare (i-PUSH) project in West Kenya
which looks to connect at least half a million Kenyans to the
National Hospital Insurance Fund. This drive particularly
targets women of childbearing age, and once enrolled in
i-PUSH they will have access to subsidised health cover
for a year.

During the year, the Group also made a contribution to the
project donating 25% of the first year’s annual premium
for 300 low-income women in the Group’s project areas
which triggers the remaining 75% contribution from i-PUSH.
This allows the enrolled women and their families to have
healthcare cover.

Outlook
Annual production guidance has been set to approximately
68,000 – 76,000 oz at AISC of US$1,050 – 1,250 /oz
including development costs, in line with the World Gold
Council (“WGC”) definition. 2022 gold production is
weighted approximately 65% towards the second half
of the year reflecting mining of the high-grade Bauhinia
Creek crown pillar beginning in May 2022. The crown pillar
consists of approximately 83,000 tonnes grading 8.4 g/t,
equating to around 22,500 ounces. Quarter 1 2022 gold
production is forecast at a similar level to Quarter 4 2021,
with quarterly production increasing in Quarter 2 2022
upon commencement of the crown pillar mining. As of
January 2022, 82% of planned 2022 ounces have grade
control information.

I would like to take this opportunity to thank our
shareholders, employees, members of the Board and our
partners for their continued commitment to the Company
and ongoing support throughout the period. With the
near-term introduction of the Singida mine to the Shanta
portfolio, in addition to the reserves replacement at New
Luika, we are excited in the near and long-term prospects
of the Company and our journey towards becoming a
diversified +100,000 oz/p.a. producer.

Eric Zurrin
Chief Executive Officer

9 May 2022

CHIEF EXECUTIVE OFFICER’S REVIEW

DIRECTORS’ REPORT

Directors’ Report

The Directors present their annual
report and the audited financial
statements of the Group for the year
ended 31 December 2021.

General
The Company was established in 2005. On 11 July 2005,
its shares were listed on the London Stock Exchange’s AIM
market. The Company is a non-cellular Company limited by
shares incorporated in Guernsey.

Principal activity
The Group’s principal activity is that of gold production and
exploration in East Africa.

Business review
A review of the business during the year is contained in the
Chairman’s Statement on page 5 and in the Chief Executive
Officer’s Review on pages 7 to 14. The Group’s business
and operations and the results thereof are reflected in
the attached financial statements. It is the business of the
Group and its subsidiaries to explore for value-adding
resources, and to turn commercially viable findings into a
mineral production asset.

Financial results
The results for the year are set out in the consolidated
statement of comprehensive income on page 53. The
activities for the year have resulted in the Group’s profit
before tax of US$1.0 million (2020: US$39.0 million).

Dividends
The final 2020 dividend of 0.10 pence per ordinary share
was paid on 30 April 2021 and a 2021 interim dividend of
0.10 pence per share was paid on 29 October 2021.

Following the year-end, the Directors have proposed a final
dividend of 0.10 pence per share, subject to the approval
of shareholders on 15 June 2022.

Subsequent events
Except as disclosed in Note 33 to the financial statements,
no other material fact or circumstance has occurred
between the reporting date and the date of this report.

Nominated advisor
The Company’s nominated advisor is Liberum
Capital Limited.

Directors
The Directors who served during the year and to the date
of this report are as follows:

Non-Executive
◼ Anthony Durrant (Chairman)
◼ Robin Fryer (retired 24 March 2021)
◼ Michelle Jenkins (appointed 13 May 2021)
◼ Ketan Patel
◼ Keith Marshall

Executive
◼ Eric Zurrin
◼ Luke Leslie

No Director shall be requested to vacate his office at any
time by reason of the fact that he has attained any specific
age. The Board considers that there is a balance of skills
within the Board and that each of the Directors contributes
effectively.

Directors’ responsibilities statement
The Companies (Guernsey) Law, 2008 requires the Directors
to prepare financial statements for each financial period,
which give a true and fair view of the state of affairs of the
Group for that period and of the profit or loss of the Group
for that period. Under that law they have elected to prepare
the financial statements in accordance with International
Financial Reporting Standards as adopted by the UK and
applicable law. In preparing those financial statements the
Directors are required to:

◼ Select suitable accounting policies and then apply them

consistently;

◼ Make judgements and estimates that are reasonable

and prudent;

◼ State whether applicable accounting standards have
been followed, subject to any material departures
disclosed and explained in the financial statements; and,

◼ Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group will continue in business.

Annual Report and Financial Statements 2021

DIRECTORS’ REPORT

The Directors are responsible for keeping proper
accounting records which disclose with reasonable accuracy
at any time the financial position of the Group and to
enable them to ensure that the financial statements have
been properly prepared in accordance with the Companies
(Guernsey) Law, 2008. They are also responsible for
safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.

The Directors confirm that they have complied with the
above requirements in preparing the financial statements.

So far as each of the Directors are aware, there is no
relevant audit information of which the Group’s auditor is
unaware; having taken all the steps the Directors ought to
have taken to make themselves aware of any relevant audit
information and to establish that the Group’s auditor is
aware of that information.

Website publication
The Directors are responsible for ensuring that the annual
report and the financial statements are made available
on a website. Financial statements are published on
the Company’s website in accordance with applicable
legislation in Guernsey governing the preparation and
dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and
integrity of the Company’s website is the responsibility of
the Directors. The Directors’ responsibility also extends
to the ongoing integrity of the financial statements
contained therein.

Going concern
The Directors have reviewed the Group’s cash flow forecasts
for the period to June 2023 and after taking into account
existing financing facilities, available cash and cash flow
projections from operations, the Directors consider that the
Group has adequate resources to continue its operational
existence for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements. Further details have been provided
within note 2.2.

Auditor
BDO LLP has expressed their willingness to continue
in office as auditor and a resolution to re-appoint
BDO LLP will be proposed at the forthcoming Annual
General Meeting.

Share options
Further details, including share options provided
to employees of the Group, are contained in the
Remuneration Committee Report on pages 29 to 31 and in
note 24 to the financial statements.

Signed on behalf of the Board of Directors on 9 May 2022.

Eric Zurrin
Chief Executive Officer

Anthony Durrant
Chairman

CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Board of Directors
The Company had two Executive Directors and four Non-
Executive Directors at the year end. All major decisions
relating to the Group are made by the Board as a whole.
The Board has established sub-committees to discharge
some of its key functions and details are set out within
this report. Operations are conducted by the subsidiaries
of the Company (principally Shanta Mining Company
Limited) under the direction of the Chairman of each of
the subsidiary companies. The Company is represented on
the board of Shanta Mining Company Limited. The Board
reviews key business risks regularly, including the financial
risks facing the Group in the operation of its business.

The individual directors of the Board have a wealth
of experience from diverse professional and personal
backgrounds. The Chairman is responsible for leading
the Board, including ensuring that an appropriate level of
diversity is maintained to promote distinct perspectives
on Group and Company matters, and for implementing a
robust governance framework. The Chief Executive Officer
is responsible for leading the Company in its strategic
pursuits and for ensuring that the Company’s business
model is implemented effectively and in line with the
Company’s values.

The Directors of the Company have elected to follow the
main principles of the QCA Corporate Governance Code.
The QCA Corporate Governance Code identifies ten
principles that focus on the pursuit of medium to long-term
value for shareholders without stifling the entrepreneurial
spirit in which the Company was created. The principles
of the code are embedded into the Company’s internal
reporting and governance structures, ensuring effective
application and details of compliance with each of the
ten principles are set out below. In addition to the details
provided below, governance disclosures can be found on
the Company’s website.

1. Strategy and business model
The Board seeks to deliver sustainable returns for all our
shareholders whilst creating long-term benefits for wider
stakeholders through sustainable and responsible mining.

The Company’s primary asset (“New Luika”) transitioned
to a predominantly underground operation and entered
commercial production in June 2017. Since 2017, New
Luika’s underground mining activities have delivered
a consistent plant feed and key developments to the

business model made during the year included investing
more heavily in on-mine exploration activities. The
objective is to generate returns for shareholders using
the cash generated from this and other projects in the
Company’s portfolio.

The Company is currently constructing the Singida Gold
Mine which will be the Company’s second producing
asset when completed. The West Kenya Project is a major
exploration project which the Company is investing in
to determine the feasibility of developing a mine in this
highly prospective licensing area. These assets diversify
the Company’s risk and are expected to bring additional
economic benefit to shareholders in the future as
they progress.

The Company implements a disciplined and modern
approach to driving operational efficiencies across the
organisation, a philosophy embraced by the entire
Shanta team. This ensures that Shanta runs an efficient
operation without compromising on growth opportunities
as it continues to build on strong foundations to take the
Company forward.

With the underground mine at New Luika fully established,
exploration activities are currently being conducted in three
distinct areas:

◼ Targeted locations within existing mining licences

adjacent to the underground reserves at our Bauhinia
Creek, Luika and Ilunga deposits;

◼ Within the economic circle of New Luika; and,
◼ Regionally, utilizing prospective exploration ground held

by the Company within the Lupa Goldfield.

This exploration programme is designed to ensure
longevity for the Company’s existing operations.

2. Understanding and meeting shareholder

needs and expectations

The Board is aware of the needs and expectations of
shareholders. The Company engages with its shareholders
through quarterly conference calls, one-on-one meetings
and at its Annual General Meeting (“AGM”).

The Board supports the use of the AGM to communicate
with both institutional and private investors. All
shareholders are given the opportunity to ask questions
and raise issues; this can be done formally during the
meeting or informally with the directors afterwards.

CORPORATE GOVERNANCE STATEMENT

At the AGM, separate resolutions are proposed on each
substantially separate issue. For each resolution, proxy
appointment forms are issued alongside the release of
the Annual Report, which provide voting shareholders
with the option to vote in advance of the AGM if they are
unable to attend in person. All valid proxy votes received
for the AGM are properly recorded and counted by
Computershare, the Company’s registrars.

As soon as practicable after the AGM has finished, the
results of the meeting are released via RNS and a copy of
the announcement is uploaded to the Company website.
At last year’s AGM, all resolutions were duly passed.

The Executive Directors, Eric Zurrin and Luke Leslie, have a
regular programme of individual meetings with institutional
shareholders and analysts following the release of each set
of quarterly, half-yearly and annual results. These meetings
provide a platform for detailed updates on the performance
of the business. Feedback from these meetings is shared
with the Board to ensure that shareholder opinion is central
to ongoing strategic decision-making.

The Executive Directors also engage with retail
shareholders following the release of each set of quarterly,
half-yearly and annual results via the Investor Meet
Company platform where questions can be put forward and
directly answered, facilitating direct engagement between
shareholders and the Company.

The Company Secretary can be contacted by shareholders
on matters of governance, as can Eric Zurrin and Luke
Leslie. Contact details are provided within every Company
announcement.

The Board is mindful of the need to protect the interests
of minority shareholders. The Board does not consider
there to be a dominant shareholder whereby it would
be necessary for any specific contractual arrangement
to be put in place to protect the interests of minority
shareholders.

3. Wider stakeholder needs and social responsibilities
The Company’s long-term success relies upon good
relations with all its stakeholder groups, both internal and
external. The Board affords highest priority to ensuring
that it maintains a strong understanding of the needs
and expectations of all stakeholders. Feedback is sought
regularly across several platforms.

The Group’s stakeholders include shareholders, employees,
suppliers, customers, regulators, industry bodies,
government bodies, local community groups, and creditors
(including the Group’s lending banks). The principal
ways in which their feedback on the Group is gathered
are via meetings and conversations. Feedback received
from stakeholders based in Tanzania and Kenya are
tabled internally during regular meetings held by Shanta
Mining Company Limited and Shanta Gold Kenya Limited
Executive Committees.

Views of the Group held by its stakeholders often
represent the Group’s wider reputation and as such are
considered vitally important. By holding regular meetings
with stakeholders, the Group can identify these views and
ensure that there is a platform for dialogue on any relevant
matters. These meetings also enable bilateral discussions
on any topics relevant to respective stakeholders and
ensure that the Company’s presence in Tanzania and Kenya
is positive for all parties.

The Company’s responsibilities to its stakeholders are
considered crucial to the Company’s business plan.
Throughout the year regular dialogue has been maintained
with District and Regional Commissioners in Songwe
and Singida in Tanzania, and with National and County
Government officials across the West Kenya Project in
Kenya, to ensure that the Group’s operations are compliant
with local laws and that social responsibilities are being
directed in line with the needs of local communities. The
Company has strong positive relationships with many
senior government officials in Tanzania and Kenya and
places great value on these close working relationships.
The management team of SMCL and Shanta Gold Kenya
Limited (“SGKL”) regularly attend government-run
conferences to promote the mining industry and SMCL also
regularly sponsors events in Tanzania.

The Company also engages with its shareholders
through quarterly calls and at its AGM, both of which
provide an effective platform for two-way communication
and feedback.

4. Effective risk management throughout

the organisation

The Board has put in place mechanisms by which risks
facing the Company are managed and reported internally.
The Board reviews this internal reporting on a regular
basis. The Board considers key business risks, including
the financial risks facing the Company in the operation of
its business. Control procedures have been put in place to
appropriately monitor and mitigate these risks.

The key financial risks faced by the Group are detailed
on pages 33 and 34. The Company has an established
framework of internal financial controls to address these
risks, the effectiveness of which is regularly reviewed by the
Executive Directors, the Audit Committee and the Board.

The Board is responsible for reviewing and approving
overall Company strategy, approving capital budgets and
plans, and for determining the financial structure of the
Company including treasury and tax affairs. Monthly results
and variances from plans are reported to the Board.

The Audit Committee assists the Board in discharging
its duties regarding the financial statements, accounting
policies and the maintenance of proper internal business,
and operational and financial controls.

CORPORATE GOVERNANCE STATEMENT

There are comprehensive procedures for budgeting and
planning, for monitoring and reporting to the Board
business performance against those budgets and plans,
and for forecasting expected performance over the
remainder of the financial period. These procedures cover
costs, cash flows, capital expenditure and balance sheet
accounts.

The Board has ultimate responsibility for the Group’s system
of internal control and for reviewing its effectiveness. This
applies to mitigating both financial and non-financial risks
faced by the Group. However, any such system of internal
control can provide only reasonable, but not absolute,
assurance against material misstatement or loss. The Board
considers that the internal controls in place are appropriate
for the size, complexity and risk profile of the Group.

The principal elements of the Group’s internal control
system include:

◼ Close management of the day-to-day activities of the

Group by the Executive Directors;

◼ An organisational structure with defined levels of

responsibility;

◼ A comprehensive annual budgeting process producing a
detailed integrated profit and loss and cash flow, which
is approved by the Board;

◼ Detailed monthly reporting of performance against

budget; and,

◼ Central control over key areas such as capital

expenditure authorisation and banking facilities.

The Group continues to review its system of internal control
to ensure compliance with best practice, while also having
regard to its size and the resources available.

Non-financial controls covering areas such as health and
safety, regulatory compliance, business integrity, risk
management, business continuity and sustainability are
continually assessed.

◼ The Remuneration Committee ensures that the

Company has a remuneration strategy that attracts
and retains necessary skills. It is also responsible in
conjunction with the Chairman for ensuring that the
Board is correctly structured in terms of good corporate
governance.

As of December 2021, the structure and membership of
Board Committees was as follows:

Audit Committee
The Group’s Audit Committee comprised of three Non-
Executive Directors being Michelle Jenkins (Chairman),
Anthony Durrant and Ketan Patel. The Audit Committee is
responsible for ensuring that appropriate financial reporting
procedures are properly maintained and reported on,
and for meeting with the Group’s auditor, reviewing their
reports, reviewing the Group accounts and reviewing the
Group’s internal controls. The Audit Committee met four
times in 2021.

Remuneration Committee
The Group’s Remuneration Committee comprised of three
Non-Executive Directors being Keith Marshall (Chairman),
Anthony Durrant and Michelle Jenkins. Details of the
Remuneration Committee’s responsibilities are provided
within the Remuneration Committee Report on page 29.
The Remuneration Committee met four times in 2021.

Sustainability Committee
The Group’s Sustainability Committee comprised of three
Non-Executive Directors being Ketan Patel (Chairman),
Anthony Durrant and Keith Marshall. The Sustainability
Committee is responsible for setting the sustainability
strategy for the Group and monitors and reviews
performance in areas of community development, safety,
environmental management, business ethics and other
sustainability issues. The Sustainability Committee met four
times in 2021.

The Board is committed to maintaining appropriate
standards for all the Company’s business activities and
ensuring that these standards are set out in written policies.
A key example is the Company’s ‘Anti Bribery Policy’.

5. A balanced and well-functioning Board led

by the Chair

The Board and the committees regularly receive detailed
and high-quality information to facilitate proper assessment
of any matters requiring a decision or insight.

The Board has three Sub-Committees which aim to meet a
minimum of three times per year and are chaired by a non-
executive Director:

◼ The Audit Committee is responsible for ensuring that

appropriate financial reporting procedures are properly
maintained and disclosed in accordance with governing
regulations.

◼ The Sustainability Committee ensures the Company
is considerate of all stakeholders and operates in
accordance with the laws of the country in which the
Company operates.

The Board comprises the Chief Executive Officer, the
Chief Financial Officer and four Non-Executive Directors
including the Chairman. Three non-executive directors
are independent, which the Board believes to be an
appropriate composition to maintain effective corporate
governance. The average tenure of the directors on
our board is seven years, and ensuring the appropriate
plans for the refreshment of the board and management
are in place is part of the Remuneration Committee’s
responsibilities.

A biography of each of the Directors is included on
pages 3 and 4.

CORPORATE GOVERNANCE STATEMENT

Director

Eric Zurrin

Luke Leslie

Anthony Durrant

Ketan Patel

Robin Fryer

Michelle Jenkins

Keith Marshall

Number of meetings held in the year

Executive

Non-Executive

Board
meeting

Audit
Committee

Remuneration
Committee

Sustainability
Committee

Executive Directors are employed by the Group on a
full-time basis whereas the Non-Executive Directors are
remunerated on a fixed-fee part-time basis. All Directors
devote a significant portion of their time in order to
discharge their duties both at and outside of Board
meetings. The Board aims to meet at least quarterly and
as required from time to time to consider specific issues
required for decision by the Board.

The table above shows the attendance at board meetings
during the year to 31 December 2021.

6. Experience, skills and capabilities of the Board
Directors who have been appointed to the Company
have been chosen because of the skills and experience
they offer. The Board of Directors has strong, relevant
experience across the areas of mining, accounting
and banking.

The Board is satisfied that, between the Directors, it has an
effective and appropriate balance of skills and experience,
including in the areas of gold mining and exploration. The
Remuneration Committee regularly assesses the balance
of skills and experiences on the board, to ensure that the
board is equipped with the necessary skills to support
management in the ever-changing environment in which
Shanta operates in. All Directors receive regular and timely
information on the Group’s operational and financial
performance. Relevant information is circulated to the
Directors in advance of meetings.

Skills and knowledge have been gained through
aggregated experience in gold mining and the wider sector
and these are maintained through ongoing involvement
and participation within the industry. The board is also
of the opinion that along with the diversity of skills, the
variety of perspectives that is brought by the diversity
of gender and ethnic background is very enriching to
a business. The Remuneration Committee takes into
consideration the levels of diversity on the board, when
making recommendations for nominees and as part of its
succession planning on the board. On May 13, last year, we
welcomed Michelle to the board, who has complemented

board deliberations with her expertise on topics related
to exploration and mining finance in Africa, whilst also
enhancing the diversity of our board.

All Directors retire by rotation at regular intervals in
accordance with the Company’s Articles of Association
and with a view of ensuring the appropriate balance of
skills, backgrounds and experiences are represented
on the board

The Company Secretary, Vistra Fund Services (Guernsey)
Limited, ensures that the Group is compliant with relevant
legislation and regulatory requirements, and keeps the
Board informed of its legal responsibilities.

7. Board evaluation
Employee and Director performance is monitored annually
via a formal assessment process. The Chairman of the
Remuneration Committee is responsible for the assessment
and monitoring of the performance of the Executive
Directors.

Agreed personal objectives and targets, including both
financial and non-financial metrics, are set each year for
the Executive Directors and performance is measured
against these metrics. Further details regarding the results
of this assessment have been set out in the Remuneration
Committee Report on page 29.

Since the appointment of Anthony Durrant as Chairman,
he has been responsible for assessing the individual
contributions of each Director of the Board to ensure that:

◼ Their contribution is relevant and effective;
◼ They are committed; and,
◼ Where relevant, they have maintained their

independence.

Succession planning is considered by the Board to be
a crucial element of ensuring continued success and
long-term prosperity for the Group. Regular reviews are
conducted at Board and Executive Management level to
ensure that high-potential individuals are identified and
supported appropriately.

CORPORATE GOVERNANCE STATEMENT

The Board comprises two Executive Directors and four
Non-Executive Directors, which it believes to be an
appropriate composition to maintain effective corporate
governance. Each Director brings a wealth of expertise
from their respective professional backgrounds and the
Board considered itself able to perform effectively during
the year under its current structure.

8. A corporate culture that is based on ethical values

and behaviours

Corporate responsibility begins with our own people,
employment practices and maintaining equitable treatment
across all levels of our organisation.

The Company seeks to implement appropriate business
policies and practices that apply ethical behaviour to the
values and norms governing the conduct of our team and
interaction with parties throughout our supply chain. We
expect all our team to always act honestly, ethically, and in
the best interests of Shanta Gold and its stakeholders.

We have a zero-tolerance approach to bribery and
corruption in all its forms and have in place an Anti-Bribery
Policy which sets out the framework applicable to all Shanta
personnel. Inappropriate conduct, or that which is expected
of being inappropriate, is communicated to our Anti-
Bribery Officer, and we encourage a corporate culture of
transparency among our team.

In line with our disciplined approach to driving operational
efficiencies, and as a reflection of our absolutely
commitment to preventing slavery and human trafficking
in its operations and supply chains, we have in place a
Modern Slavery and a Human Trafficking policy. In these
policies, we take to address the risk of slavery or human
trafficking in our operations and supply chains

To support our approach to business ethics we have strong
processes and controls which we expect our team and
third parties to follow. These are supported by additional
frameworks, such as our Procurement Policy and Code of
Conduct, which contribute to a strong corporate culture
that embeds ethical behaviour in day-to-day operations.

9. Governance structures and processes that support

good decision-making

Details of the Company’s corporate governance
arrangements are provided within this Statement. There
are no matters expressly reserved for the Board. The Board
considers the Group’s governance framework is appropriate
and in line with its plans for growth.

10. Strong communication with shareholders and other

relevant stakeholders

The Board attaches great importance to providing
shareholders with clear and transparent information on the
Company’s activities, strategy and financial position.

The Board typically meets with its major shareholders
following the release of financial results and regards the
AGM as a good opportunity to communicate directly with
shareholders via an open question and answer session.

The Company regularly holds public question and answer
calls in support of announcements, providing smaller
and private investors with direct access to management.
The Board receives regular updates on the views of
shareholders through briefings and reports from the
Chief Executive Officer, Chief Financial Officer and the
Company’s brokers. In addition, analysts’ notes and brokers’
briefings are reviewed to achieve a wide understanding of
investors’ views.

The Remuneration Committee Report on page 29, the
Audit Committee Report on page 41, and the Sustainability
Committee Report on page 35 provide details as to key
work carried out over the year by these committees.

The Company discloses contact details on its website
and on all announcements released via RNS, should
shareholders wish to communicate with the Board. Details
of all shareholder communications are provided on the
Group’s website.

Historical Annual Reports, notices of all general meetings
from the last five years and the resolutions put to a vote
at AGMs can be found on the Company’s website. Over
the last five years all resolutions put to a vote at AGMs
have been duly passed. Where a significant proportion
of votes are cast against a resolution at any general
meeting the Board seeks to understand the rationale
for this through its engagement with shareholders. The
Board also analyses the best means by which to adapt the
governing frameworks of the Company in order to appease
shareholder concerns where appropriate.

Anti-bribery and corruption
Shanta Gold is committed to acting fairly, ethically and with
integrity in all territories in which it operates. A policy of the
Company is not to engage in or tolerate bribery in any form
within Shanta Gold, its subsidiaries, or within organisations
with which it does business.

As part of the Company’s compliance procedures in
maintaining the highest standards of corporate governance,
it adheres to the standards of the UK Bribery Act 2010.

CORPORATE GOVERNANCE STATEMENT

All officers and staff of Shanta Gold are required to comply
with the Anti-Bribery Policy and, so far as is practicable, will
third parties with whom the Company does business. The
Board of Directors of Shanta Gold has overall responsibility for
bribery prevention within the Company and closely monitor the
effectiveness of the Anti-Bribery Policy.

The Group operates a share dealing code for Directors on the
basis set out in the AIM Rules.

Signed on behalf of the Board of Directors on 9 May 2022.

Eric Zurrin
Chief Executive Officer

Anthony Durrant
Chairman

REMUNERATION COMMITTEE REPORT

Remuneration Committee Report

Dear Shareholders,

It is my pleasure to again report to you on behalf of
the Remuneration Committee. Throughout 2021 the
Committee has continued to focus on aligning reward
with performance and optimising incentives, such that
the Company’s remuneration framework best facilitates
an environment that will deliver ongoing maximum
shareholder returns.

Remuneration policy and aims of the
Remuneration Committee
Our overall aim is to align employee remuneration with the
successful delivery of long-term shareholder value. Our
core principles enable us to achieve this goal:

1. To offer competitive salaries that attract, retain and

motivate highly skilled individuals;

2. To align remuneration packages with performance-
related metrics that mirror our long-term business
strategy; and,

The Chief Executive Officer and Chief Financial Officer
are invited to attend meetings of the Committee, but no
Director is involved in any decisions relating to their own
remuneration. None of the Committee has any personal
financial interest (other than as shareholders), conflicts of
interests arising from cross-directorships, or day-to-day
involvement in running the business.

Terms of reference
The terms of reference of the Remuneration Committee are
set out below.

◼ Determine and agree with the Board the Company’s

overall remuneration policy and monitor the efficacy of
the policy on an ongoing basis;

◼ Determine and agree with the Board the remuneration
of the Executive Directors and senior management;
◼ Determine the objectives and headline targets for any
performance-related bonus or incentive schemes;

◼ Monitor, review and approve the remuneration
framework for other senior employees; and,

3. To encourage accountability in the workplace and link

◼ Review and approve any termination payment such

reward with success.

The Group currently operates the following remuneration
framework:

◼ Annual salary and associated benefits such as

paid holiday;

◼ Discretionary bonuses that are granted following the

Committee’s assessment of performance against certain
key business indicators.

The Remuneration Committee consists of myself as the
Chairman together with two other independent Non-
Executive Directors; Anthony Durrant and Michelle Jenkins.
The Committee aims to meet at least three times each
year and its key responsibilities include reviewing the
performance of senior staff, setting their remuneration and
determining the payment of bonuses. The Remuneration
Committee met four times in 2021.

that these are appropriate for both the individual and
the Company.

Performance for the year
Basic salary and benefits for Executive Directors are
reviewed on an annual basis and any changes made to
the structure of these are based on a combination of
individual performance, additional responsibilities and
market conditions. Executive Directors are provided with
life assurance cover of two times annual salary.

Bonus awards are assessed on overall business and
individual performance. Executive Director and senior
management remuneration packages are heavily linked
to performance criteria, to incentivise daily conduct in
alignment with the best interests of our shareholders. The
performance, criteria and applicable weightings for 2021
assessment are detailed below. The performance for the
year is rated in five categories being ‘Below Target’, ‘On
Target’, ‘Above Target’, ‘Outstanding’, and ‘Exceptional’,
with the bonus award adjusted accordingly.

The following table details notable performance indicators
that were set in December 2020 and considered by the
Committee in its assessment of the Group’s performance
during 2021.

REMUNERATION COMMITTEE REPORT

Performance indicator

Weighting

2021 Rating

Key achievements in 2021

Safety record

20%

Exceptional

Operating performance

20%

Below Target

◼ Zero LTIs in 2021 (over 48 months since last LTI)
◼ TRIFR of 0.67, the lowest level in the last 6 years
◼ Sixth successive annual decline in injuries and a 31% reduction from 2020

◼ Total gold production of 55,280 ounces, in line with revised guidance
◼ Record annual throughput of 834,607 tonnes milled, 7% greater than budget, following

the installation of a third milll

15%

On Target

◼ Total VAT refunds of US$7.2 million received during the year with another US$4.3 million

Financial position
and profitability

Business prospects

30%

On Target

Business sustainability

15%

On Target

verified for refund by the TRA in January 2022

◼ Gross debt reduced to US$2.4 m, following repayment of the US$10 million convertible

loan note in April 2021

◼ Total liquidity of US$15.9 million at the end of 2021

◼ All ounces mined in 2021 replaced with new reserves
◼ Singida’ s construction remains on track for first production in Q1 2023, adding a second

revenue stream across the portfolio

◼ Drilling campaigns at West Kenya in the period have resulted in the conversion of more
than 100% of Inferred Resources to Indicated Resources of 117,600 oz grading 7.04 g/t

◼ Extension of current reserve life at New Luika Gold Mine to the end of 2026 and new

discoveries at the Porcupine South deposit

◼ Relationships strengthened in Tanzania and Kenya with national government
◼ All three of Singida’s Mining Licences have been extended for a further 10 years to 2032
◼ Robust social license to operate, with strong community and council relationships
◼ Various successful initiatives delivering long-term benefits to the communities

neighbouring the New Luika, Singida and West Kenya operations

REMUNERATION COMMITTEE REPORT

Taking note of the Group’s performance in the year in
respect of the above indicators, the Committee concluded
that annual bonus criteria for the year were partially met
and approved bonus awards to Executive Directors of

54.4% of respective eligible amounts. Zero remuneration
was awarded in respect of the above Performance Indicator
“Operating Performance”. As of 1 May 2022, Luke Leslie is
paid 75% of his full-time equivalent salary allowing him to
pursue external director and officer duties aside from
Shanta Gold Limited.

31 December 2021

31 December 2020

Fees/
salary

Performance
bonus

Benefits
in kind3

Other

Total

Fees/
salary

Performance
bonus

Other

Total

Directors’ remuneration

(US$000)

Fees, salary, bonuses and
related benefits

Eric Zurrin1

Anthony Durrant2

Luke Leslie1

Robin Fryer2

Ketan Patel2

Keith Marshall2

Michelle Jenkins2

Sub-total

Share based payments

Eric Zurrin1

Luke Leslie1

Sub-total

440

150

372

313

115

113

1,217

685

228

Base remuneration to Directors

1,217

685

228

Retention award

Eric Zurrin 1

Luke Leslie 1
Sub-total

Total remuneration to Directors

1,217

685

228

927

150

798

408

150

340

346

288

2,130

1,163

634

430

358

788

2,130

1,163

1,422

2,130

1,163

1,422

270

540

754

150

628

1,797

430

358

788

2,585

270

540

3,125

1 Executive
2 Non-executive
3 Relates to relocation costs of Executive Directors to East Afria in response to travel restrictions imposed from the UK due to the Covid-19 pandemic

The year ahead
The Committee views the Company’s wider remuneration
structure as appropriately balanced to incentivise high
performance and considers it to be aligned with current
market conditions. This will undergo ongoing review
throughout the coming year to ensure that our employees
and executives are remunerated appropriately in the best
interests of the Company, which includes exploring the
expansion of sustainability-linked KPI’s.

The Committee and I remain focused on ensuring that
employees and executives continue to be rewarded in
line with the delivery of long-term shareholder value and
will continue ensuring that the remuneration structure in
place reflects and incentivises the Company’s culture of
employee-shareholder alignment.

Keith Marshall
Chair of the Remuneration Committee

REMUNERATION COMMITTEE REPORT

RISK REPORT

Risk report

Risk management
The Board and Senior Management maintain an Enterprise
Risk Assessment, updated on a regular basis, which
analyses the Company’s most material risks and mitigation
measures that have been put in place or are being
considered. Additional reports are provided monthly to the
Board, including operations reports, sustainability reports,
community reports, cost analysis and compliance reports
to facilitate ongoing comprehensive assessment of Shanta’s
primary and emerging risks.

The below outlines the risk reporting structure in place
and summarises the nature of information presented to
the Board:

Shanta Gold Limited Board

CEO

Audit Committee

Sustainability Committee

Enterprise Risk Assessment
1. Political and Social License

to Operate

2. Resource Protection

3. Illegal Mining/Theft/Terrorism

4. Taxation Regime

5. Operational

6. Environmental/Safety

ESG Team

Occupational Health & Safety

Community

Environment

Climate

Sustainability Reporting

Business Ethics

Executive Committee Reports
> 30 meetings in 2021

Monthly Report of Operations
and Sustainability
12 reports in 2021

Heads of Departments (HODs)
Formal engagement with CEO
Quarterly full-day workshops

Budget, Operational and
Strategy Setting
Annual three-day meeting with all
HODs

RISK REPORT

Key performance
indicator

Business Sustainability

Principal risks and uncertainties

Risk

Background

Risk mitigation

1. Political and social
license to operate

Evaluating Shanta’s
contribution to society
and economy in host
countries

◼ Implementation of community projects
◼ Community department within Company to manage programmes and

relationships

◼ Proportion of Annual Budget allocated to fund CSR programmes
◼ Regular dialogue maintained with regional and government officials and

Company contribution to the economy communicated

2. ESG and

Sustainability

3. Resource
Protection

4. Illegal Mining/
Theft/Terrorism

5. Taxation Regime

6. Operational

Increasingly rigorous
expectations placed on
gold producers to mine
responsibly and report
on ESG

Risk of losing mining
title at New Luika Mine,
Singida, or West Kenya
Project

Risk of loss or theft of
mineral, loss of access
to areas of license, risk
of crime and violence,
reputational risk

Risk of change in
Economic Regime
impacting Shanta’s
business

◼ Investment in engaging an ESG consultant to support Sustainability

Business Sustainability

reporting and strategy

◼ Inaugural Sustainability Report published in Q1 2022
◼ Scope 1 and 2 Greenhouse Gas emissions calculated and reported on for

the first time to benchmark current position

◼ Regular dialogue maintained with mining licensing authorities in Kenya

Business Sustainability

and Tanzania

◼ Investment in drilling activities and Mine Life extension
◼ Exploration budget for 2022 increased from 2021 expenditure
◼ Investment at the Singida Project to fund construction
◼ Shanta is progressing the West Kenya Project to reach feasibility decision

◼ Community programmes to support alternative livelihoods
◼ Professional security forces at NLGM, Singida and West Kenya Project
◼ Increased security management presence
◼ Security infrastructure at all offices

Operating Performance

Business Sustainability

◼ Engagement with tax specialists to support management approach
◼ Regular communication between Board and Tax and Finance

Management team in country

◼ Regular dialogue between CEO, CFO, in-country senior management, and

Profitability

Financial Position

relevant government authorities

Risk of internal and
external factors
negatively impacting
operations and
production

◼ Uninterrupted access to water
◼ Ore stockpile levels are carefully managed
◼ Alternative power sources
◼ Increased flexibility in underground mining access
◼ Emulsion product quality restored and underground production charging

Operating Performance

Profitability

7. Environmental/

Safety

Risk of major
environmental incident
or catastrophic impact to
communities

units fixed, new unit procured

◼ Review and audit of safety management systems are regularly conducted

Safety Record

internally and on a periodic basis by external auditors
◼ All EIA’s and EMP’s are reviewed to ensure full compliance
◼ Independent audits are undertaken to review environmental

management practices

◼ Shanta is audited and accredited to ensure compliance with Cyanide Code

8. Cash Flow &
Profitability

Risk of adverse financial
liquidity, reduced access
to capital, negative
impacts of gold price
movement

◼ Liquidity monitored daily
◼ Costs are carefully monitored and reviewed against budget monthly
◼ Annual budgets are set during a robust 3-day workshop to target

efficiencies

◼ Working capital limits maintained
◼ Diversified banking relationships across multiple jurisdictions

Operating Performance

Profitability

Financial Position

Share Price Performance

9. Employees

Risk of losing key
employees, skills, access
to expatriate workers

◼ Policy in place to give preferential treatment to hires from host countries

Business Prospects

in recruitment of skilled positions that are available in the country

◼ Succession plans in place for expatriate positions to enable replacement

Business Sustainability

with those from host countries

◼ Company has a local skills development programme focussed on the

villages surrounding NLGM, and Singida

SUSTAINABILITY COMMITTEE REPORT

Sustainability Committee Report

Dear Shareholders,

I am delighted to share with you our Sustainability
Committee Report for 2021. The year has been an
important one for the Company with some key milestones
achieved across sustainability and Environmental, Social
and Governance (“ESG”).

We are proud to announce that our first standalone annual
Sustainability Report was recently published which reports
on the sustainability issues that are most material to our
stakeholders. We have also begun reporting our Scope
1 and 2 greenhouse emissions to benchmark our current
position and map a path forward towards decarbonising
our operations.

Along with these, we have continued to operate safely
and look after our team, develop local communities,
manage our resources and environmental impact, and act
responsibility and accountably in all that we do.

The role of our Sustainability Committee
Sustainability is core to our business strategy and is
led by our Board which has ultimate responsibility.
The Sustainability Committee consists of myself as the
Chairman together with two other Directors: Anthony
Durrant and Keith Marshall. The Committee aims to meet
at least three times each year and is responsible for setting
the sustainability strategy for the Group.

The Committee met four times during 2021. At each
meeting, reports for the Group in relation to health and
safety, environment, and social matters are reviewed and
evaluated. The aim of the Committee is to support the
Board by identifying the sustainability issues that are most
material to our stakeholders and monitor the Group’s
effectiveness in addressing these. The Committee formally
reviews and approves the annual Sustainability Report and
ensures all material topics are covered.

During 2021 the Committee worked with an independent
expert ESG consultant to review the Company’s
sustainability strategy. From this, and the results of the
materiality assessment, four priority areas were highlighted
which will form the foundation of our sustainability
strategy and ESG priorities moving forward. These pillars
encompass our team, our communities, management of
resources and environmental impacts, and being an ethical
and accountable business. More detail can be found in our
2021 Sustainability Report.

Stakeholder engagement
Our approach to sustainability is driven by engaging with
key stakeholders from local communities, national bodies,
and our investors. We recognise that Shanta’s long-term
success relies upon good relations with all its stakeholder
groups, both internal and external, and in maintaining a
strong understanding of their needs and expectations.

During 2021, we undertook a materiality assessment to
better understand the issues that are most important to
our stakeholders and have used this to understand which
sustainability issues to focus on.

Views of Shanta held by its stakeholders often represent
the Group’s wider reputation, so are considered vitally
important. Feedback is regularly sought across several
platforms to ensure that Shanta can identify these
views and enable dialogue on any relevant matters.
This engagement is outlined in further in our Corporate
Governance Statement on pages 23 to 28 and in our
Sustainability Report.

Putting our people first
Protecting the health and wellbeing of our employees is
a priority and the Company has a zero-tolerance policy
towards any negligence in respect of health and safety best
practices.

Education, training, and ongoing communication are
key to ensuring an injury-free workplace and promoting
safety. These are principles which are embedded in our
management systems, and employees are incentivised to
achieve high safety standards through financial recognition
for collective safety-related performance. Where possible,
the Company seeks to minimize occupational health risks
through, for example, the provision of appropriate personal
protective equipment and regular monitoring of air quality.

Our team’s commitment to operating safely resulted in
another excellent year for safety performance, with a
landmark 8.0 million man-hours passed without an LTI. The
Group also achieved a TRIFR per 1 million hours worked
of 0.67, a sixth successive annual decline in injuries and
significantly below the industry average.

We’re committed to treating our employees fairly and
creating an inclusive culture. We recognise core human
rights and labour principles, support fair wages, and the
right to freedom of association. We also do not tolerate
harassment or intimidation of any kind in the workplace. We
support continuous professional development and sponsor
training for our team, particularly when staying ahead of
changing regulations or new developments are key.

SUSTAINABILITY COMMITTEE REPORT

Group performance for the year

Core priority

Our people

Metric

Total recordable injury frequency rate (“TRIFR”)

Long term injury frequency rate

Group female employees

Board female representation

Managing our environment Waste recycled (%)

Creating opportunities for
our communities

Carbon emission intensity (tCO2-e / oz Au sold)

Social project expenditure (US$ million)

Taxes, royalties and levies paid in Tanzania + Kenya
(US$ million)

Being a responsible
accountable business

Release of inaugural Sustainability Report to enhance ESG reporting

Alignment with 6 UN Sustainable Development Goals

2021

0.67

17%

92%

0.73

0.4

27.5

2020

Year on year

Change (%)

0.97

96%

0.46

0.4

26.2

-0.3

+17

+0.27

+1.3

-31%

+13%

+100%

-4%

+59%

+5%

Materiality Assessment conducted with internal and external stakeholders to determine ESG and sustainability priorities

The benefits of a diverse workforce are clear, and we strive
to ensure ours is reflective of the societies we operate in. In
2021, 9% of our team were female, with 17% representation
on the Board. We are committed to identifying and
resolving barriers to the advancement and fair treatment
of women in our workplaces, and we will continue to work
for greater gender diversity and equality of opportunity. In
both 2020 and 2021, 99% of our employees are Tanzanian
or Kenyan and over 40% of local teams are permanent
residents of villages near our assets.

We’re committed to reducing our GHG emissions from the
energy consumption on-site and enhanced transparency,
and in 2022 are aiming to measure and report our Scope 3
GHG emissions.

Mining activities require a consistent and large volume of
water supply, which is a particular challenge in the Songwe
region where the year divides into extreme wet and dry
seasons. We aim to be efficient with our water usage to
meet our needs without compromising water availability for
local communities.

Managing resources and environmental impacts
Responsible management of resources and mitigating
our impact on the environment are core to our business
strategy. We strive to surpass the minimum regulatory
standards and expectations for our industry and set higher
and stricter standards to work towards.

Climate risks and opportunities form part of our business
strategy, and with the increasing threat of climate change
and urgent need to support a low-carbon energy transition
we are actively assessing our climate-related risks and
opportunities. In 2021, we calculated our Scope 1 and 2
GHG emissions according to the GHG Protocol Corporate
Accounting Reporting Standard for the first time to
benchmark our current position.

Group GHG Scope 1 and 2 absolute emissions in 2021
were 41,764 tCO2e, with an emissions intensity of 0.73
tCO2e / oz Au sold, an increase from the 0.46 tCO2e oz
sold in 2020, primarily due to the reduction in ounces sold
in 2021. This increase was partly reduced by a growing
proportion of NLGM’s power being drawn from TANESCO
at 22% versus 12% in 2020, and we were pleased to have
reduced the proportion of NLGM’s power coming from
HFO for a third year in a row down from 86% in 2020 to
76% in 2021.

86%

76%

Power by source

98%

97%

100%

80%

60%

40%

20%

2017

2018

2019

2020

2021

HFO (MWh)

Solar (MWh)

Tanesco (MWh)

SUSTAINABILITY COMMITTEE REPORT

New Luika has a focused water recovery program which
targets recovery of water used in tailings via a Return
Water Dam. The team at New Luika also work closely with
the Lake Rukwa Basin Water Board to communicate water
conservation strategies in place, and Annual Water Reports
are prepared for the Board to monitor the status of water
resources and consumption.

We carefully monitor discharge water quality to ensure
water supplies are not contaminated and take the disposal
of our hazardous waste very seriously, taking efforts to
minimise the risk of chemicals leaching into the landscape
and water table. Our Tailings Storage Facility 2 (“TSF 2”)
has been constructed to the highest technical standards to
ensure waste from mining activities is contained safely. This
undergoes continual monitoring and is inspected annually
by an Independent Competent Person. In 2021 there were
no material issues noted from the inspection.

Waste rock from our underground mines is deposited
on waste rock dumps. During the year the New Luika
Environment Team made progress in rehabilitating the
Luika Waste Rock Dump by adding topsoil and planting
vegetation which will eventually rehabilitate these waste
rock dumps naturally.

We work to protect biodiversity and mitigate our impact
on the surrounding landscape. We have a formal and
externally approved plan in place for the long-term
remediation of the New Luika site and are implementing
one for Singida to ensure we restore the environment
around our operations to a state that is as close as possible
to the original condition and that our local communities will
benefit for generations to come.

Creating new opportunities for our communities
Shanta puts shared success at the heart of our business
model and has a long track-record of training and
employing local residents, supporting community projects
that are driven by stakeholder engagement, and investing
in our host communities through local procurement and
contributions to government.

The high proportion of nationals in our workforce in 2021
is evidence of this, and 100% of our recruitment at the
Singida Project during the year was from talent sourced in
Tanzania. We aim to support economic development in our
host countries and prioritise local procurement as governed
by our Procurement Policy. Our contribution to government
revenues through tax, royalties and duties is significant, and
we seek to follow both the letter and spirit of the law in all
applicable jurisdictions.

We directly invest in programmes that drive long-term
sustainable development in our communities and these are
determined each year based on direct engagement with
local stakeholders. In 2021 the Company invested US$0.4
million across Tanzania and Kenya in such projects, and
among other achievements, improved water access through
a pipeline construction, enhanced health coverage for
vulnerable women in Kenya, expanded access to education
in Songwe for underprivileged students, and increased
uptake in our longstanding farming groups. More details
on Shanta’s sustainability projects can be found in our 2021
Sustainability Report.

Several new initiatives are planned for 2022 with
Education, Water, Livelihood and Health continuing as the
cornerstones of Shanta’s community priorities.

The year ahead
We are proud of our achievements to date and are pleased
to have expanded our reporting on ESG and Sustainability
matters during 2021.

Looking to the future, the Committee is aiming to keep
the Company ahead of the curve on sustainability matters
and to align its sustainability reporting with industry best
practice. Shanta is also working to increase the scope of
reporting around GHG emissions, maintain high safety
standards and protect our team, and build value for our
local communities.

I’d like to recognise all our team who support the Company
in realising our sustainability strategy in daily operations
and take this opportunity to thank them on behalf of the
Committee for their efforts during the year.

Ketan Patel
Chair of the Sustainability Committee

SUSTAINABILITY COMMITTEE REPORT

AUDIT COMMITTEE REPORT

Audit Committee Report

Dear Shareholders,

I am pleased to report to you on behalf of the Audit
Committee. The Company’s established financial reporting
structures have continued to perform effectively in the year,
and the Committee has continued to oversee the proper
maintenance of these in order to ensure the integrity of
the Company’s Annual Report. 2021 was another year in
which the Company’s robust framework of internal controls
facilitated a smooth external audit process.

Aims of the Audit Committee
The overall aim of the Audit Committee is to assist the
Board in discharging its duties regarding the financial
statements, to ensure that a robust framework of
accounting policies is in place and enacted, and to oversee
the maintenance of proper internal financial controls.

The Audit Committee consists of myself as the Chair
together with two other Non-Executive Directors, Anthony
Durrant and Ketan Patel. The Committee aims to meet
at least three times each year and its key responsibilities
include monitoring the integrity of the Group’s financial
reporting. The Chief Executive Officer and Chief Financial
Officer are invited to attend meetings of the Committee.

Key responsibilities
The terms of reference of the Audit Committee are set
out below.

◼ Maintain the integrity of the financial statements of the
Company and review any significant reporting matters
they contain;

◼ Review the Annual Report and Accounts and other

financial reports and maintain the accuracy and fairness
of the Company’s financial statements, including
through ensuring compliance with applicable accounting
standards and the AIM Rules;

◼ Review the adequacy and effectiveness of the

Company’s internal control environment and risk
management systems; and,

◼ Oversee the relationship with and the remuneration of
the external auditor, reviewing their performance and
advising the Board members on their appointment.

The Audit Committee met four times in 2021 and the
external auditors were present during three meetings.

Activities of the Audit Committee during the year
On behalf of the Board, the Audit Committee has closely
monitored the maintenance of internal controls and
risk management during the year. Key financial risks are
reported during each Audit Committee meeting, including
developments and progress made towards mitigating
these risks.

The Committee received regular reports from the Chief
Financial Officer throughout the year and was satisfied with
the effectiveness of internal controls and risk mitigation.
The Committee also received and considered reports from
the external auditor, BDO LLP (“BDO”), which included
control findings relevant to their audit.

Significant reporting matters
The Audit Committee has reviewed the recommendations
of management and the judgements disclosed in note 3
on page 66, including what it has considered to be the
most significant reporting matter(s) and judgement(s) as set
out below.

The recoverability of the Group’s VAT receivable.
The Committee reviewed the assessment made
by management that the Group’s VAT receivable is
recoverable, and is satisfied with the portions of the
receivable recognised as current and non-current assets.
The Committee is satisfied that management have
considered this appropriately and that a reasonable
conclusion has been reached based on the information
available to the Group. Appropriate disclosure has been
made within note 3 on page 66.

External audit
The Audit Committee considers various matters when
reviewing the appointment of an external auditor including
their performance in conducting the audit and its scope,
terms of engagement including remuneration and their
independence and objectivity.

BDO have been appointed as external auditor since 2012.
The Audit Committee has confirmed it is satisfied with
BDO’s knowledge of the Company and its effectiveness
as external auditor as well as the provision of non-audit
services. As such the Audit Committee has recommended
the reappointment of BDO to the Board. There will be
a resolution to this effect at the forthcoming Annual
General Meeting.

The year ahead
The Committee remain focused on ensuring that the robust
framework of internal controls currently in place at Shanta
is maintained. We will continue to closely monitor the
financial risks faced by the business, whilst also ensuring
that measures are in place to mitigate these where
appropriate.

The Committee will also continue the close ongoing
dialogue with the Company’s external auditors, highlighting
any emerging financial risks or matters facing the Company
throughout the coming year and ensuring that the
Company’s financial reporting mechanisms continue to be
subjected to scrutiny and challenge.

Michelle Jenkins
Chair of the Audit Committee

AUDIT COMMITTEE REPORT

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHANTA GOLD LIMITED

Independent auditor’s
report to the members of
Shanta Gold Limited

Opinion on the financial statements
In our opinion, the financial statements:

◼ Give a true and fair view of the state of the Group’s

affairs as at 31 December 2021 and of its loss for the
year ended;

◼ Have been properly prepared in accordance with UK
adopted international accounting standards; and
◼ Have been properly prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.

We have audited the financial statements of Shanta Gold
Limited and its subsidiaries (the ‘Group’) for the year ended
31 December 2021 which comprise the consolidated
statement of comprehensive income, the consolidated
statement of financial position, the consolidated statement
of changes in equity, the consolidated statement of cash
flows and notes to the consolidated financial statements,
including a summary of significant accounting policies.

The financial reporting framework that has been applied in
the preparation of the financial statements is applicable law
and UK adopted international accounting standards.

Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

Independence
We remain independent of the Group and Parent
Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.

Conclusions relating to going concern
In auditing the financial statements, we have concluded
that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is
appropriate. Our evaluation of the Directors’ assessment of
the Group’s ability to continue to adopt the going concern
basis of accounting included.

◼ Critical assessment of management’s financial forecasts
for the period to May 2023 and the key underlying
assumptions, including:
– gold pricing used in the forecast was compared to

forecasted future gold prices from independent third
party sources;

– forecast production statistics assessed in comparison
to the Life of Mine Plan and against current year
performance;

– operating and capital expenditures have been
compared to the board approved budgets.

– debt repayments were confirmed to third party loan
agreements to check completeness and timing; and

– we confirmed that the forecast period excluded

receipts associated with VAT receivables due to the
uncertainty of the timing.

◼ We have reviewed the scenarios prepared by

Management, which took into account potential adverse
developments in certain key assumptions and ran related
sensitivity and stress tests. These procedures included
sensitising key assumptions underpinning the forecasts,
including gold pricing, production and operational costs
and assessment of the resulting level of cash at the
end of going concern assessment period under such
scenarios.

Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group’s ability to continue as a
going concern for a period of at least twelve months from
when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHANTA GOLD LIMITED

Overview

Coverage

100% (2020: 100%) of Group revenue

95% (2020: 97%) of Group total assets

81% (2020: 94%) of Group profit before tax

Key audit
matters

Going concern

Recoverability of VAT

Carrying value of mining assets

2021



2020




Materiality

Group financial statements as a whole

US$1.0 million (2020: US$1.8 million) based on 5% of
2-year average profit before tax (2020: on 4.5% of 2020
profit before tax).

An overview of the scope of our audit
Our Group audit was scoped by obtaining an
understanding of the Group and its environment, including
the Group’s system of internal control, and assessing the
risks of material misstatement in the financial statements.
We also addressed the risk of management override
of internal controls, including assessing whether there
was evidence of bias by the Directors that may have
represented a risk of material misstatement.

We identified three significant components, being the
three entities in the Group comprising the Parent Company
(Shanta Gold Limited) and its two subsidiaries in Tanzania
(Shanta Mining Company Limited) and Kenya (Shanta
Gold Kenya Limited). The Group audit team performed
a full scope audit on the Parent Company. The Tanzanian
component was subject to a full scope audit by a BDO
member firm, and the Kenyan component was subject to a
full scope audit by a non-BDO firm in Kenya. The Kenyan
component was scoped in for the first time as a significant
component as part of 2021 year-end Group audit.

Our involvement with component auditors
For the work performed by component auditors, we
determined the level of involvement needed in order to
be able to conclude whether sufficient appropriate audit
evidence has been obtained as a basis for our opinion on
the Group financial statements as a whole. Our involvement
with component auditors included the following:

◼ Detailed Group reporting instructions were sent to the

component auditors, which included the significant areas
to be covered by the audits (including areas that were
considered to be key audit matters as detailed above),
and set out the information to be reported to the Group
audit team.

◼ We performed a remote review of the component

audit file in Tanzania using our online audit software
platform, held regular calls and video conferences with
the Tanzanian component audit team during the audit.
We performed a review of the Kenya audit file remotely
and held regular calls and video conferences with the
Kenya component audit team. We attended the closing
meeting virtually.

◼ The Group audit team was actively involved in the

direction of the audits performed by the component
auditor for Group reporting purposes, along with
the consideration of findings and determination of
conclusions drawn. We performed our own additional
procedures in respect of the significant risk areas
that represented Key Audit Matters in addition to the
procedures performed by the component auditor.

The financial information of the remaining non-significant
components was subjected to analytical review procedures
by the Group audit team.

Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including
those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and
directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
these matters. We determined that recoverability of VAT
and Carrying value of mining assets are key audit matters in
our audit of the financial statements of the current period.
Going concern, which was a key audit matter as part of
2020 year-end audit is not considered to be a key audit
matter as part of 2021 year-end audit based on the criteria
noted above for our audit of the financial statements of the
current period.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHANTA GOLD LIMITED

Key audit matter

How the scope of our audit addressed the key audit matter

Recoverability of VAT
(see notes 2 and 17)

We considered and challenged management’s assessment of the carrying value, timing of recovery and presentation of
the receivables.

The Group has significant VAT
receivables of US$26.9 million
as at 31 December 2021, of
which US$4.2 million which is
recognised as a current receivable
and US$22.7 is classified as
non-current.

As disclosed in note 17,
judgement is required as to its
validity, the timing of recovery
of the VAT and consideration of
the Tanzanian legislation and
definition of Raw Minerals. As
such, the recoverability, carrying
value and presentation of VAT
represent a significant focus for
our audit and a key audit matter.

Our specific audit procedures in this regard included:

◼ We considered and challenged management’s assessment of the recovery of the VAT. In particular, this included
consideration of the history of repayments, including the repayments made in the year, the ability to offset the
receivable against corporate tax payments, the current regulatory environment, the nature of correspondence with
the relevant authorities, publicly available information and inquiries made with management and its VAT advisors.

◼ We have obtained written confirmation from the Group’s external legal adviser, which supports the Board’s

assessment that the VAT is legally valid and remains recoverable. In relying upon the assessments made by such
expert, we evaluated the competence, independence and objectivity of the professional adviser relied upon by
management.

◼ We reviewed correspondence between the Group and the Tanzanian Revenue Authority (“TRA”) and made inquiries
of management regarding the nature of its ongoing discussions with the TRA to evaluate the reasonableness of
Management’s judgement in respect of the recoverability of VAT.

◼ We considered and challenged management’s assessment of the classification between current and non-current

including consideration of the payment history, ability to offset, nature of ongoing correspondence and legislative
changes.

◼ We reviewed the disclosures in the Financial Statements to satisfy ourselves that the judgements and estimates

have been appropriately disclosed.

Key observations
Based on the procedures performed, we found the judgements made by management in their assessment of the carrying value and recoverability of the
VAT receivable to be acceptable and we consider the disclosures to be appropriate.

Key audit matter

How the scope of our audit addressed the key audit matter

Carrying value of mining assets
(see notes 2 and 12)

The mining assets comprise 2 cash
generating units (“CGUs”) – the
New Luika mine and the Singida
mine. Mining assets are the most
significant class of assets to the
statement of financial position.

Management and the Directors
are required to assess whether
there are potential indicators
of impairment of the Group’s
mining assets at each reporting
date and, if potential indicators
of impairment are identified,
management are required to
perform a full assessment of the
recoverable value of the mining
assets in accordance with the
requirements of the relevant
accounting standard.

The assessment of the recoverable
value of the mining assets requires
judgements and estimates by
management and the Directors
regarding the inputs applied
in the models including future
gold and silver prices, production
and reserves, operating and
development costs and discount
rates and therefore a key
audit matter.

We considered and challenged management’s assessment of the carrying value of mining assets.

Our specific audit procedures in this regard included:

◼ We assessed the Group’s accounting policy with respect to mining assets and the appropriateness of the cash

generating unit allocation for impairment indicator assessment purposes against IAS 36 - “Impairment of assets” (“IAS
36), the Group’s development strategy and licence structure.

◼ We inspected the licences to confirm valid title and reviewed government correspondence and assessed whether

commitments and terms under the licences have been adhered to.

◼ We inspected the Group’s budget and strategic plans for future development to check that expenditure has been

planned for further development of the Singida mine.

◼ We have examined Management’s impairment indicator assessments for both New Luika and Singida CGUs as of 31

December 2021 under the requirements of IAS 36 and considered the indicator of impairment of lower than expected
production rates identified by management with respect to New Luika CGU to be in line with criteria set out under IAS
36 for mining assets. As a result Management prepared a value in use model to support their impairment assessment
on the New Luika Gold Mine.

◼ We obtained management’s discounted cash flow models and performed data integrity and mathematical accuracy of

the models.

◼ We involved our internal valuation specialists to assess the reasonableness of the discount rate applied in the

impairment model for the New Luika CGU.

◼ We compared the actual performance of the New Luika CGU during 2021 to budgets for the period in order to assess

the accuracy of management’s forecasting.

◼ We critically challenged the NPV model, focusing on the appropriateness of estimates with reference to empirical

data and external evidence with specific emphasis on the following assumptions: gold and silver prices, reserves and
production levels, operating and development costs and discount rates.

◼ We compared the gold price forecast to published market data, including market consensus research, which confirmed

the price forecasts used in the model to be in an acceptable range versus market forecasts.

◼ We assessed the consistency of production profiles and capital expenditure forecasts against the Group’s life-of-mine
plans, approved budgets and discussed with operational management and geologists to inform our assessment and
understanding of these plant and budgets.

◼ We reviewed management’s sensitivity analysis and performed our own additional sensitivity analysis on a

combination of key inputs to assess the impact of changes in assumptions.

◼ We reviewed the disclosures in the financial statements to ensure that they were prepared in accordance with the

requirements of the accounting standards.

Key observations
Based on procedures performed we found the judgements and estimates applied by Management in arriving at the carrying value of mining asset to be
supportable and appropriate.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHANTA GOLD LIMITED

Our application of materiality
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect
of misstatements. We consider materiality to be the
magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements.

Reporting threshold
We agreed with the Audit Committee that we would
report to them all individual audit differences in excess of
US$20,000 (2020:US$37,000). We also agreed to report
differences below this threshold that, in our view, warranted
reporting on qualitative grounds.

In order to reduce to an appropriately low level the
probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality,
to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.

Based on our professional judgement, we determined
materiality for the financial statements as a whole and
performance materiality as follows:

Group financial statements

31 Dec 21

Materiality

US$ 1.0 million

5% of the 2-year average
profit before tax

31 Dec 20

US$ 1.8 million

4.5% profit before tax

Basis for
determining
materiality

Rationale for
the benchmark
applied

Performance
materiality

Basis for
determining
performance
materiality

We consider that users of
the financial statements of
profit-orientated entities
will generally be concerned
with reported earnings.
Average profit before tax for
2 years was considered to be
an appropriate benchmark
reflecting the Company’s
scale of operations in the
year.

We consider that users of
the financial statements
of profit-orientated
entities will generally be
concerned with reported
earnings. As the Group
has become profit
making, profit before tax
is considered the most
appropriate benchmark
measure.

US$0.75 million

US$1.3 million

Performance materiality was set at 75% of the group
materiality based on consideration of factors including
the level of historical errors and nature of activities.

Component materiality
We set materiality for each component of the Group
based on a percentage of Group materiality dependent
on the size and our assessment of the risk of material
misstatement of that component. Component materiality
was set at US$0.9 million. In the audit of the components,
we further applied performance materiality levels of 75%
of the component materiality to our testing to ensure that
the risk of errors exceeding component materiality was
appropriately mitigated.

Other information
The directors are responsible for the other information.
The other information comprises the information included
in the annual report and financial statements, other than
the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is
to read the other information and, in doing so, consider
whether the other information is materially inconsistent
with the financial statements or our knowledge obtained
in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact.

We have nothing to report in this regard.

Other Companies (Guernsey) Law, 2008 reporting
We have nothing to report in respect of the following
matters where the Companies (Guernsey) Law, 2008
requires us to report to you if, in our opinion:

◼ Proper accounting records have not been kept by the

Parent Company; or

◼ The Parent Company financial statements are not in

agreement with the accounting records; or

◼ We have failed to obtain all the information and

explanations which, to the best of our knowledge and
belief, are necessary for the purposes of our audit.

Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are
responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHANTA GOLD LIMITED

◼ We also communicated relevant identified laws and

regulations and potential fraud risks to all engagement
team members and the component auditors as part
of meetings at the planning stage and remained
alert to any indications of fraud or non-compliance
with laws and regulations throughout the audit. The
engagement partner concluded that the engagement
team collectively had the appropriate competence and
capabilities to identify or recognize non-compliance with
laws and regulations.

Our audit procedures were designed to respond to risks
of material misstatement in the financial statements,
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.

A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.

Use of our report
This report is made solely to the Parent Company’s
members, as a body, in accordance with Section 262 of
the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Parent
Company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Parent
Company and the Parent Company’s members as a body,
for our audit work, for this report, or for the opinions we
have formed.

Jack Draycott
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom

9 May 2022

BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).

Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.

Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above,
to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is
detailed below:

◼ We gained an understanding of the Group’s activities
and considered the laws and regulations of significant
components’ jurisdictions to be of significance in the
context of the Group audit. In doing so, we made
inquiries of management and the Audit Committee,
considered the Group’s control environment as it
pertains to compliance with laws and regulations and
considered the activities of the Group.

◼ We made inquiries of management and the Board and
reviewed Board and Committee minutes to identify any
instances of irregularities or non-compliance.
◼ We agreed the financial statement disclosures to

underlying supporting documentation, performed
detailed testing on accounts balances, which were
considered to be at a greater risk of susceptibility
to fraud including revenue. Our procedures on
revenue included:
a) We have reviewed the revenue recognition policy

adopted by the Group to check it is compliant with
the IFRS 15 revenue recognition criteria;

b) We have traced a sample of sales in the year to

supporting documentation and verified that revenue
had been recognised in the appropriate period by
selecting and testing a sample of invoices raised in
December 2021 and January 2022;

c) We reviewed the related disclosures in the financial

statements.

◼ In addressing risk of management override of control, we
performed testing of a sample of general ledger journal
entries to the financial statements, including verification
of journals which we consider exhibit higher fraud
risk characteristics based on our understanding of the
Group. As part of our testing of management override of
controls we performed procedures on accounts subject
to greater management estimate including assessment
of provisions related to legal claims;

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Consolidated statement of
comprehensive income

Notes

7, 17

(US$000)

Revenue

Loss on non-hedge derivatives and other commodity contracts

Depreciation

Other cost of sales

Cost of sales

Gross profit

Administration expenses

Exploration and evaluation costs

Operating profit

Finance income

Finance expense

Profit before taxation

Taxation

(Loss) / profit for the year attributable to the equity holders of the
parent Company

(Loss) / profit after taxation

Other comprehensive income:

Items that may be reclassified to profit or loss:

Exchange differences on translating foreign entities which can subsequently be
reclassified to profit or loss

Total comprehensive (expense) / income attributable to the equity holders of
the parent Company

(Loss) / earnings per share attributable to the equity holders of the
parent Company

31 Dec 2021

103,571

–

(16,533)

(61,078)

(77,611)

25,960

(10,160)

(11,133)

4,667

3,012

(6,679)

1,000

(7,168)

(6,168)

31 Dec 2020

147,431

(11,688)

(19,361)

(59,664)

(79,025)

56,718

(8,156)

(4,809)

43,753

1,870

(6,622)

39,001

(21,798)

17,203

–

(6,168)

17,203

Basic (loss) / earnings per share (US$ cents)

Diluted (loss) / earnings per share (US$ cents)

(0.589)

2.023

2.018

The accompanying notes on pages 59 to 83 form an integral part of these financial statements.

The loss / (profit) for the year and the total comprehensive (expense)/income for the year are attributable to the equity
holders of the parent Company. There are no non-controlling interests. The items in the above statement are derived from
continuing operations.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Consolidated statement of
financial position

(US$000)

ASSETS

Non-current assets

Intangible assets

Property, plant and equipment

Right of use assets

Other receivables

Total non-current assets

Current assets

Inventories

Trade and other receivables

Restricted cash

Cash and cash equivalents

Total current assets

TOTAL ASSETS

CAPITAL AND RESERVES

Equity

Share capital and premium

Share option reserve

Convertible loan notes reserve

Translation reserve

Shares to be issued

Retained deficit

TOTAL EQUITY

LIABILITIES

Non-current liabilities

Loans and other borrowings

Provision for decommissioning

Provision for deferred taxation

Total non-current liabilities

Current liabilities

Trade and other payables

Loans and other borrowings

Convertible loan notes

Income tax payable

Total current liabilities

TOTAL LIABILITIES

TOTAL EQUITY AND LIABILITIES

Notes

31 Dec 2021

31 Dec 2020

43,343

89,656

2,313

22,698
158,010

27,234

7,046

13,214
47,494

205,504

43,343

77,449

3,260

27,560
151,612

30,040

4,649

2,500

41,582
78,771

230,383

211,540

210,493

148

450

(55,356)
156,782

3,454

7,500

12,381
23,335

17,169

2,823

5,395
25,387

48,722

205,504

338

5,374

450

1,043

(51,776)
165,922

4,270

6,346

10,451
21,067

12,208

5,713

9,999

15,474
43,394

64,461

230,383

The accompanying notes on pages 59 to 83 form an integral part of these financial statements.

The financial statements were approved and authorised for issue by the board of Directors on 9 May 2022 and signed on
its behalf by:

Eric Zurrin
Chief Executive Officer

Anthony Durrant
Chairman

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Consolidated statement of
changes in equity

US$000

Share
capital

Share
premium

Share
option
reserve

Convertible
loan notes
reserve

Translation
reserve

Shares to be
issued

Retained
deficit

Total
equity

Total equity 31 December 2020

118

158,322

473

5,374

450

627

(69,114)

96,250

Profit and total comprehensive income
for the year

Total comprehensive income for year

Share based payments

Lapsed options

627

Shares issues (net of expenses)

51,395

(135)

416

17,203

135

1,043

51,426

149

210,344

338

5,374

450

1,043

(51,776)

165,922

Total equity 31 December 2020

Loss and total comprehensive expense
for the year

Total comprehensive expense
for the year

Share based payments

Lapsed options

Exercised options

Repayment of convertible loan notes

Dividend payments

1,012

(156)

(34)

(5,374)

450

(1,043)

(6,168)

156

5,374

(2,972)

(55,356)

156,782

Total equity 31 December 2021

150

211,390

148

The accompanying notes on pages 59 to 83 form an integral part of these financial statements.

The nature and purpose of each reserve within Shareholders’ equity is described as follows:

Reserve

Share capital

Description and purpose

Amount subscribed for share capital at nominal value

Share premium

Amount subscribed for share capital in excess of nominal value

Share option reserve

Cumulative fair value of options charged to the statement of
comprehensive income net of transfers to the retained deficit on
exercised and cancelled/lapsed options

Convertible loan notes reserve

Equity element of convertible loan notes

Translation reserve

Cumulative gains and losses on translating the net assets of overseas
operations to the presentation currency

Shares to be issued

Nominal value of share capital and premium on shares to be issued

Retained deficit

Cumulative net gains and losses recognised in the consolidated
statement of comprehensive income

CONSOLIDATED STATEMENT OF CASH FLOWS

Consolidated statement of
cash flows

(US$000)

Net cash flows generated from operating activities

Notes

31 Dec 2021

12,586

31 Dec 2020

34,608

Investing activities

Purchase of intangible assets

Purchase of plant and equipment

Purchase of right of use assets

Purchase of assets under construction

Capitalised mine development expenditure

Net cash flows used in investing activities

Financing activities

Ordinary shares issued (net of expenses)

Loans repaid

Principal paid on lease liabilities

Interest paid

Purchase of silver to fulfil Silver Stream obligation

Buy-back of convertible loan notes

Equity dividend paid

Loans received (net of loan arrangement fees)

Movement in restricted cash

(206)

(14)

(18,002)

(8,494)

(26,716)

(2,655)

(1,134)

(816)

(354)

(9,807)

(2,972)

1,000

2,500

(8,549)

(142)

(260)

(4,654)

(8,543)

(22,148)

39,996

(10,987)

(1,087)

(1,975)

(331)

Net cash flows (used in) / received from financing activities

(14,238)

25,616

Net (decrease) / increase in cash and cash equivalents

(28,368)

38,076

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

The accompanying notes on pages 59 to 83 form an integral part of these financial statements.

41,582

13,214

3,506

41,582

NOTES TO THE FINANCIAL STATEMENTS

Notes to the financial statements

1. General information
Shanta Gold Limited (the Company) is a limited Company
incorporated in Guernsey. The address of its registered
office is 11 New Street, St Peter Port, Guernsey, GY1 2PF.
The nature of the Group’s operations and its principal
activities are set out in the Chairman’s Statement, the Chief
Executive Officer’s Review and the Directors’ Report on
pages 7 to 20.

These financial statements were approved and authorised
for issue by the Board of Directors on 9 May 2022 and
signed on its behalf by Eric Zurrin and Anthony Durrant.

2. Accounting policies
The principal accounting policies adopted in the
preparation of the consolidated financial statements are set
out below. The policies have been consistently applied to
all the years presented, unless otherwise stated.

Basis of preparation

2.1
The consolidated financial statements have been prepared
under the historical cost convention except for certain
financial instruments which are carried at fair value, as
explained in the accounting policies below. They are
presented in US Dollars, which is also the Company’s
functional currency. Amounts are rounded to the nearest
thousand, unless otherwise stated.

The financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS
and IFRIC Interpretations) issued by the International
Accounting Standards Board (“IASB”), as adopted by the
United Kingdom (“IFRS”).

The preparation of financial statements in compliance with
adopted IFRS requires the use of certain critical accounting
estimates. It also requires Group’s management to exercise
judgement in applying the Group’s accounting policies.
The areas where significant judgements and estimates have
been made in preparing the financial statements and their
effect are disclosed in note 3.

2.2 Going concern
Based on a review of the Group’s budgets, cashflow
forecasts and its ability to flex its future spending to suit
prevailing circumstances, the Directors consider that
the Group has adequate resources to continue in its
operational existence for the foreseeable future.

At 31 December 2021 the Group had an unrestricted
cash balance of US$13.2 million. Despite delays in
recovering VAT, the Group has sufficient operating
cashflows to continue to operate for the foreseeable future,
including meeting contractual debt repayments in the
forecast period.

The Directors have concluded that these circumstances
form a reasonable expectation that the Group has
adequate resources to continue in operational existence,
for the foreseeable future. For these reasons, the Directors
continue to adopt the going concern basis in preparing the
Annual Report and Accounts.

2.3 New standards, amendments and interpretations

effective in 2020

A number of new and amended standards and
interpretations issued by IASB have become effective for
the first time for financial periods beginning on (or after) 1
January 2021 and have been applied by the Group in these
financial statements. None of these new and amended
standards and interpretations had a significant effect on the
Group because they are either not relevant to the Group’s
activities or require accounting which is consistent with the
Group’s current accounting policies.

2.4 New standards, amendments and interpretations
that are not yet effective and have not been
early adopted

There are a number of standards, amendments to
standards, and interpretations which have been issued by
the IASB that are effective in future accounting periods
and which have not been adopted early. None of these are
expected to have a significant effect on the Group.

The principal accounting policies adopted are set
out below.

Basis of consolidation

2.5
2.5.1 Subsidiaries
SSubsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls
an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the
ability to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from the date
on which control is transferred to the Group. They are
deconsolidated from the date that control ceases. Where
necessary, adjustments are made to the financial statements

Annual Report and Financial Statements 2021NOTES TO THE FINANCIAL STATEMENTS

of subsidiaries to bring their accounting policies into line
with those used by other members of the Group. All intra-
Group transactions, balances, income and expenses are
eliminated on consolidation. The consolidated financial
statements comprise the financial statements of the
subsidiaries listed in note 14.

2.5.2 Business combinations
The acquisition method of accounting is used to account
for business combinations by the Group. The consideration
transferred for the acquisition of a business is the fair value
of the assets transferred, liabilities incurred and the equity
interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Acquisition
related costs are expensed as incurred. Identifiable assets
acquired and liabilities and contingent liabilities assumed in
a business combination are measured at their fair values at
the acquisition date.

A business is an integrated set of activities and assets
that is capable of being conducted and managed for the
purpose of providing a return in the form of dividends,
lower costs or other economic benefits. A business consists
of inputs and processes applied to those inputs that
have the ability to create outputs that provide a return to
the Company and its shareholders. A business need not
include all of the inputs and processes that were used by
the acquiree to produce outputs if the business can be
integrated with the inputs and processes of the Company
to continue to produce outputs If the integrated set of
activities and assets is in the exploration and development
stage, and thus, may not have outputs, the Company
considers other factors to determine whether the set of
activities and assets is a business. Those factors include, but
are not limited to, whether the set of activities and assets:

◼ Has begun planned principal activities;
◼ Has employees, intellectual property and other inputs
and processes that could be applied to those inputs;

◼ Is pursuing a plan to produce outputs; and
◼ Will be able to obtain access to customers that will

purchase the outputs.

Foreign currencies

2.6
2.6.1 Functional and Presentation Currencies
The individual financial statements of each Company
within the Group are prepared in the currency of the
primary economic environment in which it operates (its

functional currency). For the purpose of the consolidated
financial statements, the results and financial position of
each Company are expressed in US Dollars, which is the
functional currency of the Company and the presentation
currency for the consolidated financial statements.

Assets and liabilities of foreign entities (i.e. those with a
functional currency other than US Dollar) are translated at
rates of exchange ruling at the financial year end and the
results at rates approximating to those ruling when the
transactions took place. Exchange differences arising on
translating the opening net assets at opening rate and the
results of overseas operations at actual rate are recognised
in other comprehensive income and accumulated in the
translation reserve.

2.6.2 Transactions and balances
In preparing the financial statements of the individual
companies, transactions in currencies other than the
entity’s functional currency (foreign currencies) are recorded
at the rates of exchange prevailing on the dates of the
transactions. At each reporting date, monetary assets
and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing on the reporting
date. Non-monetary items carried at fair value that are
denominated in foreign currencies are translated at
the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured
in terms of historical cost in a foreign currency are not
retranslated.

Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items,
are included in profit or loss for the period. Exchange
differences arising on the retranslation of non-monetary
items carried at fair value are included in profit or loss
for the period except for differences arising on the
retranslation of non-monetary items in respect of which
gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain
or loss is also recognised directly in equity.

Revenue recognition

2.7
The Group enters into spot agreements for the sale of
refined gold. The Group recognises the sale upon delivery
at which point control of the product has been transferred
to the customer. Transfer of control generally takes place
when refined gold is credited to the customer’s account at
the refinery. The Group also enters into forward contracts

NOTES TO THE FINANCIAL STATEMENTS

for the sale of refined gold. Revenue arising from sales
under these contracts is recognised when the product has
been delivered under the terms of the contract at which
point control of the product has been transferred to the
customer.

Once an ore body is considered commercially recoverable
the project is classified as a “development project”.
Evaluation expenditure incurred on development projects is
capitalised within the “assets under construction” category
of property, plant and equipment.

Revenue is measured based on the consideration to which
the Group expects to be entitled under the terms of a
contract with a customer. In most cases the consideration
is determined by reference to the gold market price
at the point of delivery, except for instances where
the arrangement falls under a forward sales contract.
Consideration typically falls due upon delivery.

The Group enters into forward sales contracts for the sale
and delivery of gold at a pre-determined and agreed price.
These forward sales contracts meet the own use exemption
under IFRS 9 and as such are recognised as revenue.

Inventory

2.8
Stores and consumables are stated at the lower of cost and
net realisable value. The cost of stores and consumables
includes expenditure incurred in acquiring the inventories
and bringing them to their existing location and condition.

Gold ore stockpiles are valued at the lower of weighted
average cost, including related overheads and depreciation
of relevant mining assets, and net realisable value, using
assay data to determine the amount of gold contained in
the stockpiles, adjusted for expected gold recovery rates.

Gold bullion and gold in process are stated at the lower
of weighted average cost and net realisable value. Cost
includes direct materials, direct labour costs and production
overheads, including depreciation of relevant mining
properties.

Net realisable value is the estimated selling price less all
expected costs to completion and costs to be incurred
in selling.

2.9

Intangible assets and exploration and evaluation
expenditure

2.9.1 Exploration expenditure
Exploration expenditure is defined as expenses incurred
on the initial search for mineral deposits with economic
potential as well as expenditure incurred for the
purposes of obtaining more information about existing
mineral deposits.

Exploration expenditure, with the exception of costs of
acquiring tenement rights, is typically expensed as incurred,
until an ore body is considered commercially recoverable.

2.9.2 Evaluation expenditure
Evaluation expenditure arises from a detailed assessment
of deposits or other projects that have been identified
as having economic potential in order to determine their
technical feasibility and commercial viability. Evaluation
expenditure is expensed as incurred unless it can be
demonstrated that the related evaluation expenditure will
generate future economic benefit.

2.9.3 Acquired exploration and evaluation properties
Exploration and evaluation stage properties acquired
either as an acquisition of individual assets or as part of a
business combination are capitalised as an intangible asset.
The Group capitalises costs only when it has the direct or
indirect right to explore or evaluate the associated acquired
properties. Subsequent exploration and evaluation
expenditure incurred on such properties is expensed as
incurred until the technical and commercial viability of
developing the property has been demonstrated under the
same criteria described above.

Once the commercial viability is determined the acquired
exploration and evaluation properties are transferred
to assets under construction within property, plant and
equipment.

2.9.4 Licencing costs
The costs of acquiring mining and prospecting licences,
which are reflected in the financial statements as intangible
assets, are capitalised and are amortised on a straight-line
basis when mining operations commence.

Costs of entering into option agreements to explore and
evaluate other licence holders’ rights, with the option of
converting these licences are also capitalised and treated
on the same basis. Subsequent to initial recognition,
tenement rights are assessed for impairment annually
and when facts and circumstances indicate they may be
no longer viable, or where licences have expired with no
intention of renewal, an impairment loss is recognised
as exploration costs in the statement of comprehensive
income. Where expiring licences are in the renewal process
they are not considered impaired until a decision is reached
by the Licencing Authority, unless there are circumstances
which suggest that the renewal will not be granted.

2.10 Property, plant and equipment
Items of property, plant and equipment are recorded
at purchase cost less accumulated depreciation and
impairment losses. Gains or losses on disposal of property,
plant and equipment are determined by reference to their
carrying amount and estimated useful life. Depreciation is
charged on a straight-line basis at rates calculated to write
down the cost of each asset to its residual value over its
expected useful life. The applicable rates are as follows:

Description within Mining and Other equipment

Rates (%)

Mine equipment and vehicles

Power generation and office equipment

Computer equipment

Motor vehicles

Furniture and fittings

25.0

12.5

33.3

25.0

16.7

Annual Report and Financial Statements 2021NOTES TO THE FINANCIAL STATEMENTS

The useful lives and residual values are re-assessed annually.

2.10.1 Mining assets
Once a project reaches the stage of commercial
production, the capitalised development project is
transferred from assets under construction to the “mining
assets” category. Mining assets are depreciated using the
unit of production method based on proven and probable
reserves.

Subsequent development expenditure is capitalised only
if it is expected to give rise to a future economic benefit.
Costs associated with underground development are
capitalised when the works provide access to the ore body,
whereas costs associated with ore extraction from operating
ore body sections are treated as operating costs.

2.10.2 Assets under construction
Assets under construction comprise development projects
and assets in the course of construction at both the mine
development and production phases.

Development projects comprise interests in mining
projects where ore body is considered commercially
recoverable and the development activities are ongoing.
Expenditure incurred on a development project is recorded
at cost, less applicable accumulated impairment losses.
Any net income earned before the commencement of
commercial production is credited against the capitalised
development expenditure. Interest on borrowings, incurred
for the purpose of the establishment of mining assets, is
capitalised during the construction phase.

The cost of an asset in the course of construction comprises
its purchase price and any costs directly attributable to
bringing it into working condition for its intended use, at
which point it is transferred from assets under construction
to other relevant categories and depreciation commences.

Assets under construction are not depreciated.

2.10.3 Deferred stripping asset
Production stripping costs in the open pit mines are
capitalised as a “deferred stripping asset” within property,
plant and equipment if all of the following criteria are met:

◼ It is probable that the future economic benefit

associated with the stripping activity will flow to
the entity;

◼ The entity can identify the component of the ore body

for which access has been improved; and,

◼ The costs relating to the stripping activity associated

with that component can be measured.

If the above criteria are not met, stripping costs are
recognised directly in profit or loss.

The Group initially measures the stripping activity asset at
cost, this being the accumulation of costs directly incurred
to perform the stripping activity that improves access to the
identified component ore.

After initial recognition, the stripping activity asset is carried
at cost less accumulated amortisation and impairment
losses. Amortisation is calculated on the basis of units of
production.

Impairment of non-current assets

2.11
The carrying amount of the Group’s non-current assets
is compared to the recoverable amount of the assets
whenever events or changes in circumstances indicate
that the net book value may not be recoverable. The
recoverable amount is the higher of value in use and the
fair value less costs to sell.

Value in use is estimated by reference to the net present
value of expected future cash flows of the relevant
cash generating unit. Individual mining properties are
considered to be separate income generating units for this
purpose, except where they would be operated together as
a single mining business.

If the recoverable amount is less than the carrying amount
of an asset, an impairment loss is recognised. The revised
carrying amount is amortised in line with the Group’s
accounting policy.

A previously recognised impairment loss is reversed if the
recoverable amount increases as a result of a reversal of the
conditions that originally resulted in the impairment. The
reversal is recognised in the statement of comprehensive
income and is limited to the carrying amount that
would have been determined, net of depreciation, had
no impairment loss been recognised in the previous
reporting period.

2.12 Taxation
The Company is taxed at the standard rate of income tax
for Guernsey companies, which is 0%. The Group is liable
for Tanzanian tax arising on activities in the Tanzanian
subsidiaries, which are liable for Tanzanian Corporation
Tax at 30%, and for Kenyan tax arising on activities in
the Kenyan subsidiaries, which are liable for Kenyan
Corporation Tax at 30%. In addition, the Group may be
liable for withholding taxes on the repatriation of assets
and income from the Tanzanian and Kenyan subsidiaries
to the Company as there is no double tax treaty between
Guernsey and Tanzania or Kenya.

Taxation on the profit or loss for the year comprises both
current and deferred taxes. Current taxation is provided
for on the basis of the results for the year computed in
accordance with tax legislation and any adjustment of the
tax payable for the previous year.

The Group’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by
the reporting date.

Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying amounts
of the assets and liabilities in the financial statements and
the corresponding tax bases used in the computation
of taxable profit and is accounted for using the balance

NOTES TO THE FINANCIAL STATEMENTS

sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the
asset is realised. Deferred tax is charged or credited to the
statement of comprehensive income, except when it relates
to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.

2.13 Provisions
Provisions are recognised when the Group has a present
obligation, legal or constructive, resulting from past events
and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and a reliable estimate can be made of the obligation.

2.14 Decommissioning, site rehabilitation and

environmental costs

The Group is required to restore mine and processing
sites at the end of their producing lives to a condition
acceptable to the relevant authorities and consistent with
the Group’s environmental policies. The net present value
of estimated future rehabilitation costs is provided for in the
financial statements and capitalised within property, plant
and equipment on initial recognition. The capitalised cost is
amortised on a unit of production basis. Unwinding of the
discount is recognised as finance cost in the statement of
comprehensive income as it occurs. Changes in estimates
are dealt with on a prospective basis as they arise. The
costs of on-going programmes to prevent and control
pollution and to rehabilitate the environment are charged
to profit or loss as incurred.

2.15 Share-based payment/incentive programmes
The Group grants incentive share awards to executive
directors and certain employees. Share options and
incentive share awards are measured at fair value (excludes
the effect of non-market based vesting conditions) at the
date of grant. The fair value is measured using an option
pricing model at the grant date and is expensed on a
straight-line basis over the vesting period. Share based
payments are expensed in the statement of comprehensive
income over the vesting period.

Where the Group issues equity instruments to persons
other than employees, the statement of comprehensive
income is charged with the fair value of goods and
services received.

2.16 Segmental information
An operating segment is a distinguishable component
of the Group that is involved in gold mining, processing,
exploration or related activities, within a particular

economic environment, which is subject to risks and
rewards that are different from those of other segments.

Operating segments are reported in a manner consistent
with internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker,
who is responsible for allocating resources and assessing
performance of the operating segments, has been
identified as the Board of Directors of the Company.

The Group operates in two geographical locations;
Tanzania and Kenya. For management purposes, the
Group is organised into two main operating segments,
this being mining, processing, exploration and related
activities in Tanzania, and exploration activities at the West
Kenya Project.

All of the Group’s activities within each geographical
location are interrelated and each activity is dependent on
the others. Accordingly, all significant operating decisions
are based upon analysis of the Group as two segments.

2.17 Leases
The Group accounts for a contract, or a portion of a
contract, as a lease when it conveys the right to use an
asset for a period of time in exchange for consideration.
Leases are those contracts that satisfy the following criteria:

◼ There is an identified asset;
◼ The Group obtains substantially all the economic

benefits from use of the asset; and,

◼ The Group has the right to direct use of the asset.

The Group considers whether the supplier has substantive
substitution rights. If the supplier does have those rights,
the contract is not identified as giving rise to a lease. In
determining whether the Group obtains substantially all
the economic benefits from use of the asset, the Group
considers only the economic benefits that arise from use of
the asset. In determining whether the Group has the right
to direct use of the asset, the Group considers whether
it directs how and for what purpose the asset is used
throughout the period of use. If the contract or portion of
a contract does not satisfy these criteria, the Group applies
other applicable IFRSs rather than IFRS 16.

Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term,
with the discount rate determined by reference to the rate
inherent in the lease unless this is not readily determinable,
in which case the Group’s incremental borrowing rate
on commencement of the lease is used. Variable lease
payments are only included in the measurement of the
lease liability if they depend on an index or rate. In such
cases, the initial measurement of the lease liability assumes
the variable element will remain unchanged throughout the
lease term. Other variable lease payments are expensed in
the period to which they relate.

On initial recognition, the carrying value of the lease
liability also includes:

Annual Report and Financial Statements 2021NOTES TO THE FINANCIAL STATEMENTS

◼ Amounts expected to be payable under any residual

value guarantee;

◼ The exercise price of any purchase option granted in

favour of the Group if it is reasonably certain to assess
that option; and,

◼ Any penalties payable for terminating the lease, if

the term of the lease has been estimated based on
termination option being exercised.

Right of use assets are initially measured at the amount of
the lease liability, reduced for any lease incentives received,
and increased for:

◼ Lease payments made at or before commencement of

the lease;

financial assets or financial liabilities at fair value through
profit or loss are recognised immediately in profit or loss.

2.18.1 Financial assets
All regular way purchases or sales of financial assets are
recognised and derecognised on a trade date basis.
Regular way purchases or sales are purchases or sales of
financial assets that require delivery of assets within the
time frame established by regulation or convention in the
marketplace.

All recognised financial assets are measured subsequently
in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets.

◼ Initial direct costs incurred; and,
◼ The amount of any provision recognised where the

Group is contractually required to dismantle, remove or
restore the leased asset.

a) Classification of financial assets
Financial assets that meet the following conditions are
measured subsequently at amortised cost using effective
interest rate method:

Subsequent to initial measurement lease liabilities increase
as a result of interest charged at a constant rate on the
balance outstanding and are reduced for lease payments
made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease.

When the Group revises its estimate of the term of any
lease (because, for example, it re-assesses the probability of
a lessee extension or termination option being exercised),
it adjusts the carrying amount of the lease liability to reflect
the payments to make over the revised term, which are
discounted using a revised discount rate. The carrying
value of lease liabilities is similarly revised when the
variable element of future lease payments dependent on
a rate or index is revised, except the discount rate remains
unchanged. In both cases an equivalent adjustment is
made to the carrying value of the right-of-use asset, with
the revised carrying amount being amortised over the
remaining (revised) lease term. If the carrying amount of the
right-of-use asset is adjusted to zero, any further reduction
is recognised in profit or loss.

2.18 Financial instruments
Financial assets and financial liabilities are recognised
in the Group statement of financial position when the
Group becomes a party to the contractual provisions of
the instrument. Financial assets and financial liabilities
are only offset and the net amount reported in the
consolidated statement of financial position and statement
of comprehensive income when there is a currently
enforceable legal right to offset the recognised amounts
and the Group intends to settle on a net basis or realise the
asset and liability simultaneously.

Financial assets and financial liabilities are initially measured
at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of

◼ The financial asset is held within a business model whose
objective is to hold financial assets in order to collect
contractual cash flows; and,

◼ The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments
of principal and interest on the principal amount
outstanding.

The Group does not hold any financial assets that meet
conditions for subsequent recognition at fair value through
other comprehensive income (“FVTOCI”).

b) Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially all
the risks and rewards of ownership of the asset to another
entity. If the Group neither transfers nor retains substantially
all the risks and rewards of ownership and continues to
control the transferred asset, the Group recognises its
retained interest in the asset and an associated liability
for amounts it may have to pay. If the Group retains
substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues
to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.

c) Cash and cash equivalents
Cash and cash equivalents are carried at cost and include
all highly liquid investments with a maturity of three
months or less.

Restricted cash are those amounts held by third parties on
behalf of the Group and are not available for the Group’s
use; these are accounted for separately from cash and cash
equivalents.

2.18.2 Financial liabilities
The classification of financial liabilities at initial recognition
depends on the purpose for which the financial liability was
issued and its characteristics.

NOTES TO THE FINANCIAL STATEMENTS

All purchases of financial liabilities are recorded on trade
date, being the date on which the Group becomes party to
the contractual requirements of the financial liability. Unless
otherwise indicated the carrying amounts of the Group’s
financial liabilities approximate to their fair values.

The Group’s financial liabilities consist of financial liabilities
measured at amortised cost and financial liabilities at fair
value through profit or loss.

a) Financial liabilities measured subsequently at

amortised cost

Financial liabilities that are not (i) contingent
consideration of an acquirer in a business combination,
(ii) held-for-trading, or (iii) designated as at FVTPL, are
measured subsequently at amortised cost using the
effective interest method. The Group’s financial liabilities
measured at amortised cost comprise loans and other
borrowings, equipment loans, lease obligations, silver
stream obligation, convertible loan notes and other
payables and accruals.

The effective interest method is a method of calculating the
amortised cost of a financial asset/liability and of allocating
interest income/expense over the relevant period. The
effective interest rate is the rate that discounts estimated
future cash receipts/payments through the expected life
of the financial asset/liability or, where appropriate, a
shorter period.

b) Silver Stream arrangement
If estimates of future payments are revised, the carrying
amount of the financial liability is adjusted to reflect actual
and revised estimated cash flows. The liability is settled
through the silver produced by the Group throughout
the year. In the event of a shortfall in silver production
versus the Company’s minimum delivery obligations, the
Company may have to procure silver externally and, if so,
any additional associated cost is recognised as a finance
expense. The revised carrying amount is adjusted by
computing the present value of estimated future cash flows
at the financial liability’s original effective interest rate.
The adjustment is recognised in profit or loss as income
or expense. Bi-product credits from the silver stream
arrangement are recognised within cost of sales.

c) Convertible Loan Notes
Convertible loan notes are assessed in accordance with
IAS 32 “Financial Instruments: Presentation” to determine
whether the conversion element meets the fixed-for-fixed
criterion. Where this is met, the instrument is accounted
for as a compound financial instrument with appropriate
presentation of the liability and equity components. Where
the fixed-for-fixed criterion is not met, the conversion
element is accounted for separately as an embedded
derivative which is measured at fair value through
profit or loss.

On issue of a convertible loan, the fair value of the liability
component is determined by discounting the contractual
future cash flows using a market rate for a non-convertible
instrument with similar terms. This value is carried as a

liability on the amortised cost basis until extinguished on
conversion or redemption. The remainder of the proceeds
is allocated, net of issue costs, to a separate component of
equity or a separate liability. Issue costs are apportioned
between the components based on their respective
carrying amounts when the instrument was issued.

On conversion, the liability is reclassified to equity and no
gain or loss is recognised in the profit or loss. Where the
convertible loan is redeemed early or repurchased in a
way that does not alter the original conversion privileges,
the consideration paid is allocated to the respective
components and the amount of gain or loss relating to the
liability element is recognised in interest received or paid.
The finance costs recognised in respect of the convertible
borrowings includes the accretion of the liability.

The convertible loan notes are not secured against any
assets of any Group Company. The Group has determined
them to be a compound financial instrument requiring a
proportion of the loan to be classified as equity. The equity
element represents the difference between the fair value
of a similar liability with no equity conversion option and
the fair value of the existing convertible notes in issue.
Conversion of the convertible loan notes is at the discretion
of the beneficiary holders. Accreted interest is charged to
the statement of comprehensive income over the life of
the notes.

d) Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised
when the Group has extinguished its contractual
obligations, it expires or is cancelled. Any gain or
loss on derecognition is taken to the statement of
comprehensive income.

e) Fair Value measurement hierarchy
IFRS 13 “Fair Value Measurement” requires certain
disclosures which require the classification of financial
assets and financial liabilities measured at fair value using a
fair value hierarchy that reflects the significance of the input
used in making the fair value measurement.

The fair value hierarchy has the following levels:

◼ Quoted prices (unadjusted) in active markets for

identical assets or liabilities (level 1);

◼ Input other than quoted prices included within level
1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived prices)
(level 2); and,

◼ Inputs for the asset or liability that are not based on

observable market data (unobservable input) (level 3).

The level in the fair value hierarchy within which the
financial asset or financial liability is categorised is
determined on the basis of the lowest level input that is
significant to the fair value measurement.

Financial assets and financial liabilities are classified in their
entirety into only one of the three levels.

Annual Report and Financial Statements 2021NOTES TO THE FINANCIAL STATEMENTS

2.18.3 Capital
Financial instruments issued by the Group are treated
as equity if the holder has only a residual interest in the
assets of the Group after the deduction of all liabilities.
The Company’s ordinary shares are classified as equity
instruments.

For the purpose of disclosure given in note 23 the Group
considers its capital to comprise its ordinary share capital,
share premium and retained losses. There has been no
change in what the Group considers to be capital since the
previous period. The Group is not subject to any externally
imposed capital requirements.

3. Critical accounting estimates, assumptions and

judgements

The preparation of financial statements in conformity
with IFRS requires management to make judgements,
estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated
assumptions are based on historical experience and various
other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if
the revision affects both current and future periods.

The estimates, assumptions and judgements that have a
risk of causing material adjustment to the carrying amount
of assets and liabilities within the next financial year are
discussed below.

Impairment of property, plant and equipment
Property, plant and equipment are reviewed for impairment
when events or changes in circumstances indicate the
carrying amount may not be recoverable. Where potential
triggers for impairment are identified which may indicate
that the carrying value of items of property, plant and
equipment may have been impaired, a review is undertaken
of the recoverable amount of that asset based on value
in use calculations which involve management’s estimates
and assumptions including a range of discount rates, gold
prices, cash costs and also the impact of any legislative
changes in Tanzania. Refer to note 12 for further details.

Impairment of intangible exploration and evaluation assets
The Group tests whether acquired exploration and
evaluation assets, mining options and licence acquisition
costs have suffered any impairment under IFRS 6 when
facts and circumstances suggest that the carrying amount
may not be recoverable. The recoverable amounts are
determined based on an assessment of the economically
recoverable mineral reserves, and future profitable
production or proceeds from the disposition of recoverable
reserves. Actual outcomes may vary. This assessment is
highlighted in note 11.

Recoverability, classification and measurement of VAT
receivable
In July 2017, the Mining Act 2010 (the “Mining Act”)
was amended to restrict exportation of raw minerals (the
“export ban”). An amendment to the VAT Act 2014 also
came into effect, treating any exportation of raw minerals as
an exempt supply for which no input tax is deductible. The
term ‘raw minerals’ however remained undefined across the
statutes. The Group exports doré bars which it does not
consider to be a raw mineral.

On 25 January 2019, Government Notice 60 was published
which clarified that the ‘export ban’ seeks to prohibit the
export of mineral and mineral concentrates without mineral
value addition (“the Guidelines”). The Guidelines introduce
the new concept of ‘mineral value addition’ and, per the
Guidelines, gold doré is considered to have undergone
sufficient value addition in Tanzania to qualify for export.
On 22 February 2019, The Written Laws (Miscellaneous
Amendments) (No.2) Act amended the Mining Act to
provide a definition of ‘raw minerals’. Accordingly, when
read together with the Guidelines that establish that
doré has sufficient value added to qualify for export, ‘raw
minerals’ does not include doré and input VAT on gold
exported by the Group in the form of doré is claimable
under the legislation passed in 2017.

On 19 June 2020 the Finance Act, 2020 was published, in
which section 68 of the VAT Act, 2014 was amended such
that exportation of raw minerals is no longer treated as an
exempt supply for which no input tax is deductible.

There is an express legislative framework in Tanzania to
apply VAT due to a taxpayer by way of setoff against tax
due to the Tanzania Revenue Authority (“TRA”). Based on
confirmations from TRA, approved VAT Refunds have been
assessed as being immediately available for repayment
or setoff.

The Company’s input VAT refund application for the period
from July 2017 to June 2020 has been initially rejected on
the grounds that gold doré exported during that period
was deemed a raw mineral under the legislation prevailing
at the time. The Company has obtained an independent
legal opinion confirming that under a proper construction
of the law, Shanta is eligible for input VAT refunds under
section 28 of the VAT Act, 2014, which prevailed during
that period.

Recoverability of the VAT receivable in Tanzania is assessed
based on a judgement by management and following
review of all relevant considerations, including precedent
set within the financial year in the form of reimbursements
and setoffs, refer to note 17 for further information.

Key sources of estimation uncertainty are set out as follows:

Depreciation of mining assets
Mining assets are depreciated using the unit of production
method based on proven and probable reserves. Units
of production are significantly affected by resources,
exploration potential and production estimates together

NOTES TO THE FINANCIAL STATEMENTS

with economic factors, commodity prices, foreign currency,
exchange rates, estimates of costs to produce reserves and
future capital expenditure. The depreciation charge for the
year is disclosed within note 12.

Depreciation of plant and equipment
Depreciation is provided in the consolidated financial
statements so as to write down the respective assets to
their residual values over their estimated useful lives and
as such the selection of the estimated useful lives and the
expected residual values of the assets require the use of
estimates and judgements. The depreciation charge for the
year is disclosed within note 12.

Inventories
Stock is valued at the lower of cost or net realisable value.
Costs that are incurred in or benefit the production process
are accumulated as ore stockpiles, gold in process and gold
bullion. Although the quantities of recoverable metal are
reconciled by comparing the grades of ore to the quantities
of gold and silver actually recovered (metallurgical
balancing), the nature of the process inherently limits
the ability to precisely monitor recoverability levels. Net
realisable value tests are performed at least annually and
represent the estimated future sales value less estimated
costs to complete production and bring the product to sale.
These net realisable tests take into account management’s
estimate of the maximum values to be realised from ore
stockpiles, in some instances through blending of different
ore stockpile grades, prior to these being added to future
processing plant feeds. The carrying value of stock is
disclosed within note 16.

Mineral Resources and Ore Reserves
Quantification and classification of Ore Reserves requires a
judgement on whether Mineral Resources are economically
mineable and whether they meet the criteria of ‘proven’ or
‘probable’ respectively. These judgements are based on
an assessment of relevant mining, geological, economic
and environmental factors amongst others. These factors
are a source of uncertainty and changes could result
in an increase or decrease in Mineral Resources and
Ore Reserves.

Decommissioning, site rehabilitation and
environmental costs
The Group’s mining and exploration activities are subject
to various laws and regulations governing the protection
of the environment. The Group recognises management’s
best estimate of the rehabilitation costs in the period in
which they are incurred. This estimate includes judgements
from management in respect of which costs are expected
to be incurred in the future, the timing of these costs and
their present value. Actual costs incurred in future periods
could differ materially from the estimates. Additionally,
future changes to environmental laws and regulations,
life of mine estimates and discount rates could affect the
carrying amount of this provision. Such changes could
similarly impact the useful lives of assets depreciated on
a straight-line-basis, where those lives are limited to the
life of mine. A 1% change in the discount rate on the
Group’s rehabilitation estimates would result in an impact

of US$0.5 million (2020: US$0.4 million) on the provision for
environmental and site restoration. The value of the year-
end decommissioning provision is disclosed within note 22.

Silver Stream obligation
Under the silver streaming agreement (note 20) to which
the Group is party there is an obligation to deliver silver
by-product to the sole customer in return for proceeds
remitted in the 2016 financial year. The value of obligation
arising through this agreement is established by computing
the present value of estimated future cash flows at the
financial liability’s original effective interest rate. This
exercise incorporates the impact of judgements made
within the mine plan in respect of future silver production
and includes estimates in respect of the anticipated price
of silver in future periods. The year-end silver stream
obligation uses forward curve information based on the
year-end silver spot price, which was US$23.8 /oz at the
end of 2021 (2020: US$24.9 /oz). A 1% change in silver
production estimates would result in an impact of less than
US$0.1 million (2020: less than US$0.1 million) on the silver
stream liability.

4. Revenue
The Group has recognised the following amounts relating
to revenue in the statement of comprehensive income:

US$000

31-Dec-21

31-Dec-20

Revenue from contracts with customers

103,571

147,431

All revenue is derived from sales of gold from one
geographic location and to one customer.

5. Loss on non-hedge derivatives and other

commodity contracts

US$000

Loss on commodity swaps delivered into
/ settled

31-Dec-21

31-Dec-20

(11,688)

There were no open non-hedge derivatives and other
commodity contracts at 31 December 2021 (2020: none).

6. Finance income

US$000

Bank interest

Change in estimate of decommissioning
liability (note 22)

Fair value adjustment on Silver Stream
advance (note 20)

31-Dec-21

31-Dec-20

547

1,850

2,464

3,012

1,870

Annual Report and Financial Statements 2021NOTES TO THE FINANCIAL STATEMENTS

7. Finance expense

US$000

31-Dec-21

31-Dec-20

(Loss) / profit before taxation

8.
(Loss) / profit before tax is arrived at after charging:

Interest on loans and other borrowings

Interest on lease liabilities (note 13)

532

Interest on Silver Stream advance (note 20)

1,341

Fair value adjustment on Silver Stream
advance (note 20)

Change in estimate on Silver Stream
advance (note 20)

Convertible Loan Note accretion (note 21)

Loan modification adjustment on
Convertible Loan note (note 21)

Finance expense at amortised cost

Unwinding of discount on
decommissioning liability (note 22)

Purchase of silver to fulfil silver stream
obligation

VAT receivable credit adjustment (note 17)

Total finance expense

2,032

1,443

940

617

1,178

2,599

1,026

354

2,700

6,679

228

(216)

5,700

591

331

6,622

Interest on loans and other borrowings includes interest on
borrowings of US$62,000 (2020: US$711,000) (note 20) and
coupon interest on Convertible Loan Notes of US$470,000
(2020: US$1,321,000) (note 21).

The finance expense arising on financial liabilities measured
at amortised cost has been calculated using the effective
interest rate method.

US$000

31-Dec-21

31-Dec-20

Depreciation of tangible assets (note 12)

16,039

Amortisation of right of use assets (note 13)

Amortisation of intangible assets (note 11)

Directors’ remuneration

Staff costs

Auditors’ remuneration

Audit fees of the Company and Group

Audit fees of subsidiaries by associates of
Group auditor

Audit fees of subsidiaries by other auditors

Fees for review of interim information

961

1,888

16,556

175

18,956

1,163

3,125

17,623

162

9. Taxation
Effective 1 January 2008, the Company is taxed at the
standard rate of income tax for Guernsey companies which
is 0%. Taxation for other jurisdictions is calculated at the
rates prevailing in the respective jurisdictions.

Tax charge for the year relates to:

US$000

Current tax charge (corporate and turnover
tax charge)

31-Dec-21

31-Dec-20

5,238

21,866

Deferred tax charge / (income)

Net charge

1,930

7,168

(68)

21,798

The tax charge for the year can be reconciled to the profit
before taxation per the statement of comprehensive
income as follows:

Profit / (Loss) before taxation (US$000)

1,000

39,001

Tax at the standard tax rate

Tanzanian Corporation tax at 30%

Different tax rates applied in overseas
jurisdictions

Permanent adjustments

Unrecognised taxable losses in subsidiaries

Adjustments in respect of prior periods

Tax charge

300

1,180

2,905

2,395

388

7,168

11,700

1,376

3,718

880

4,124

21,798

NOTES TO THE FINANCIAL STATEMENTS

Deferred tax
Analysis of deferred tax assets and deferred tax liabilities is
as follows:

US$000

Deferred tax asset

Deferred tax liability

Net deferred tax liability

31-Dec-21

31-Dec-20

(12,381)

(10,451)

(12,381)

(10,451)

At the end of the year, the Group had tax losses
available in Tanzania amounting to US$47,970,000 (2020:
US$42,604,000). Of these losses, US$23,579,000 (2020:
US$18,213,000) have arisen within non-producing licence
areas, for which no deferred tax asset has been recognised
as it is not yet probable that future taxable profits will be
available against which these tax losses can be utilised.
The remaining US$24,391,000 (2020: US$24,391,000) of
these losses have arisen as a result of realised losses on
speculative transactions, for which no deferred tax asset
has been recognised as it is not yet probable that future tax
gains on speculative transactions will be available against
which these tax losses can be utilised.

The deferred tax liability has arisen on the temporary
differences between the carrying value of assets and tax
written down value of assets. Included within the Group’s
deferred tax liability is an amount of US$5.2 million
(2020: US$5.2 million) relating to deferred tax liability on
the acquisition of Shield Resources Limited and Boulder
Investments Limited.

10. (Loss) / earnings per share
Basic (loss) / earnings per share is computed by dividing
the (loss) / profit attributable to ordinary shareholders
by the weighted average number of ordinary shares
outstanding during the year.

(Loss) / profit for the year attributable to
equity holders of Company

(Loss) / profit used in calculation of basic
earnings per share (see below)

31-Dec-21

31-Dec-20

(6,168)

17,203

(6,168)

17,203

Basic (loss) / earnings per share (US cents)

(0.589)

2.023

Weighted average number of shares
in issue

1,047,885,766

850,274,078

There were no share incentives outstanding at the end
of the year that could potentially dilute basic earnings
per share.

In 2020, there were share incentives outstanding at the end
of the year that could potentially dilute basic earnings per
share in the future as shown in the table below:

31-Dec-20

The Group had the following instruments
which could potentially dilute basic
earnings per share in the future:

Shares to be issued

4,543,126

The movement in deferred tax assets and liabilities during
the year is as follows:

Shares to be issued related to performance bonuses
payable to management and senior employees in
respect of 2020.

(US$000)

At 1 January 2020

Accelerated tax depreciation

Other movements

At 31 December 2020

Accelerated tax depreciation

Other movements

At 31 December 2021

Deferred
tax asset

Deferred
tax liability

Net
deferred tax
liability

As the Group was in a profit-making position, the potential
ordinary shares were dilutive and therefore diluted earnings
per share were calculated as follows:

(10,519)

710

(642)

710

(642)

(10,451)

(2,050)

120

(12,381)

Profit for the year attributable to equity holders of
Company

Profit used in calculation of diluted earnings per share

Diluted earnings per share (US cents)

Weighted average number of shares in issue and
potential ordinary shares

31-Dec-20

17,203

2.018

852,665,906

Annual Report and Financial Statements 2021NOTES TO THE FINANCIAL STATEMENTS

Acquired
exploration
and evaluation
assets

22,519

19,979

251

42,498

Total

23,378

19,979

(14)

43,343

251

42,498

43,343

Owned
prospecting
licences

Third party
primary mining
licences

Owned mining
licence

Third party
mining licence

387

197

(14)

183

11. Intangible assets

US$000

At 1 January 2020

Additions (note 11(1))

Amortisation

At 31 December 2020

Additions (note 11)

Amortisation

At 31 December 2021

Acquired exploration and evaluation assets relate to the
Group’s Lupa Goldfields licences which were acquired in
April 2013 and the West Kenya Project which was acquired
in August 2020. The Lupa licences cover a significant land
package of prospective exploration ground surrounding the
Company’s New Luika Gold Mine.

Impairment of licences
In Tanzania, the Mining Act 2010, (which replaced the
previous Mining Act 1998), introduced new procedures on
renewal of Prospecting Licences (PL’s) that involves a tender
process. As disclosed in the accounting policies, licences
which are viable and within the licence renewal processes
are not considered impaired.

Impairments relate to projects which have been assessed
for impairment and found to be no longer viable or where
licences have expired with no intention of renewal.

At the year-end there were 4 active licences relating to the
West Kenya project. The licences are considered to be a
single CGU and are assessed collectively. Management
have concluded that whilst some of the licences acquired in
2020 are no longer in the portfolio, exploration work on the
remaining licenses has already yielded successful results,
and further work is scheduled for 2022. Where licences
have expired without renewal, this is generally a part of the
natural process of condensing the portfolio down to the
most valuable licences and follows a management decision
not to pursue renewal, as such no impairment has been
identified.

11.1 Acquisition of West Kenya Project in 2020
On 10th February 2020, the Company (through its wholly
owned subsidiary, Shanta Gold Kenya (Guernsey) Limited)
agreed to purchase 100% of the shares of Shanta Gold
Kenya Limited (formerly Acacia Exploration (Kenya) Limited)
from three subsidiaries of Barrick Gold Corporation
(“Barrick”). On 19th August 2020, the Company completed
the acquisition. US$20.0 million was capitalised in respect
of US$7.8 million cash consideration paid, 54.6 million
Shanta Gold ordinary shares issued to Barrick, and
transaction costs of US$0.7 million.

The consideration for this transaction also included a 2%
net smelter royalty chargeable on future gold production
at the West Kenya Project. Consideration also included
an additional cash payment of US$0.5 million (see note
32), which may become payable within four years of the
acquisition date, subject to satisfaction of a condition
subsequent to the acquisition agreement.

The West Kenya Project did not meet the definition of
a business outlined by IFRS 3 or as detailed within the
Company’s accounting policies (see note 2.5.2). Assets
and liabilities acquired as part of the transaction were
accounted for at cost, with the excess of the purchase price
over the cost of the assets and liabilities acquired being
allocated to acquired exploration and evaluation assets
within intangible assets.

NOTES TO THE FINANCIAL STATEMENTS

12. Property, plant and equipment

Gold
processing
plant

Mining
assets

Assets under
construction1

Mining
and other
equipment

Decom-
missioning
asset

Deferred
stripping
asset

Total

32,751

4,727

36,219

256,445

42,732

123,811

8,543

16,205

5,793

142

42,732

132,354

21,998

32,893

28,797

2,968

31,765

86,763

12,150

98,913

18,972

3,582

22,554

(821)

3,906

14,478

(821)

36,219

270,102

35,259

256

35,515

173,697

18,956

192,653

US$000

Cost

At 1 January 2020

Additions

Change in estimate

At 31 December 2020

Accumulated Depreciation

At 1 January 2020

Charge for the year

At 31 December 2020

Net book value

At 31 December 2020

10,967

33,441

21,998

10,339

704

77,449

Cost

At 1 January 2021

42,732

132,354

Additions

Asset transfers

At 31 December 2021

Accumulated Depreciation

At 1 January 2021

Charge for the year

At 31 December 2021

Net book value

2,264

44,996

31,765

2,350

34,115

8,494

3,794

144,642

98,913

9,877

108,790

21,998

18,871

(11,895)

28,974

32,893

206

5,837

38,936

22,554

3,724

26,278

3,906

36,219

675

270,102

28,246

4,581

36,219

298,348

3,906

35,515

3,906

35,603

192,653

16,039

208,692

At 31 December 2021

10,881

35,852

28,974

12,658

675

616

89,656

1. Assets under construction primarily relate to capitalised costs at the Singida Project and ongoing phases of underground development at New Luika.

The impairment indicator relates only to the Group’s
producing asset, New Luika. Management determined VIU
for this CGU by calculating the net present value of the
future cash flows expected to be generated by New Luika.
The estimates of future cash flows were derived from the
most recent Life of Mine plans and approved budgets.
Gold price assumptions used to estimate future revenues
are based on observable market or publicly available data,
including forward prices and analyst forecasts. The future
cash flows are discounted using a weighted average cost of
capital (“WACC”), which reflects specific market risk factors
and country risk affecting each CGU.

Impairment of property, plant and equipment
Property, plant and equipment are reviewed for impairment
when events or changes in circumstances indicate the
carrying amount may not be recoverable. During the year
production levels declined when compared to the mine
plan due to lower than anticipated grades recovered. This
had an adverse effect on the Group’s performance for
the year triggering an impairment review under IAS 36
‘Impairment of assets’.

Management measured the recoverable amount by
comparing the assets’ carrying amount to the higher of
their fair value less costs of disposal (“FVLCD”) or value
in use (“VIU”). For the purposes of assessing impairment,
assets are grouped at the lowest level for which there are
largely independent cash inflows (cash generating units or
“CGU”). The Group has two CGUs being New Luika Gold
Mine and Singida within property, plant and equipment.

Annual Report and Financial Statements 2021NOTES TO THE FINANCIAL STATEMENTS

The following are the key assumptions used in the
impairment review:

13. Leases

Pre-tax discount rate

Gold price (2022)

Gold price (2023)

Gold price (2024+)

Life of mine (years)

New Luika

US$000

13.2%

Right of use assets

US$ 1,842/oz

At 1 January 2020

US$ 1,855/oz

Additions

US$ 1,875/oz

Amortisation

At 31 December 2020

The VIU calculations have demonstrated headroom over
the assets’ carrying amounts indicating no impairment.
Gold price and discount rate are considered the most
significant assumptions impacting the impairment
calculations and these have been sensitised as follows:

Additions

Amortisation

31 December 2021

◼ +/- $100 per ounce change in the projected future gold
prices per ounce noted in the assumptions table above,
while holding all other assumptions constant.
◼ +/- 2 change in discount rate, independent from
the change in gold price, while holding all other
assumptions constant.

None of the above sensitivities resulted in an
impairment loss.

The breakeven price per ounce of gold, if assumed to be
constant in future years, is US$1,514. The breakeven pre-
tax discount rate is 39.58%.

Management is satisfied that the Group’s property, plant
and equipment were not impaired at the reporting date.

Lease liabilities

At 1 January 2020 (note 20)

Additions

Interest expense (note 7)

Lease payments

Foreign exchange movements

At 31 December 2020 (note 20)

Additions

Interest expense (note 7)

Interest paid

Lease payments

Foreign exchange movements

At 31 December 2021 (note 20)

Mining
and other
equipment

2,947

1,476

(1,163)

3,260

(961)

2,313

1,198

1,216

(846)

1,757

868

(1,134)

(64)

1,424

NOTES TO THE FINANCIAL STATEMENTS

Current lease liabilities

Mobile equipment 1

Mobile equipment 2

Solar power units 3

Mobile equipment5

Mobile equipment 4

Office space 6

Office space 7

Office space 8

Leased land 9

Non-current lease liabilities

Solar power units3

Mobile equipment5

Mobile equipment4

Office space6

Leased land9

Total lease liabilities

31-Dec-21

31-Dec-20

324

281

146

266

125

546

665

1,178

162

597

759

1,424

515

579

1,757

(1) Mobile equipment: A lease for mobile equipment from Sandvik for a capital amount of
€712,000 (US$832,000) repayable monthly over thirty-six months commencing on 29
November 2018. The lease was fully repaid in 2021.

(2) Mobile equipment: A lease for mobile equipment from Sandvik for a capital amount of
€635,000 (US$718,000) repayable monthly over thirty-six months commencing on 28
February 2019. The lease was fully repaid in 2021.

(3) Solar power units: A lease for solar power units from Redavia Tanzania Asset Limited for a
five-year period commencing in May 2017 for variable lease payments payable monthly.

(4) Office space: A lease for mobile equipment from Sandvik for a capital amount of $870,000

repayable quarterly over thirty-six months commencing on 15 November 2021.

(5) Mobile equipment: A lease for mobile equipment from Sandvik for a capital amount
of €987,000 ($1,200,000) repayable quarterly over thirty-six months commencing on
25 February 2020.

(6) Office space: A lease for office space from Nevada Golden Coins Limited for an eighteen-

month period commencing November 2020.

(7) Office space: A lease for office space from Innovative Management Services Limited for an

eight-year period commencing 1 January 2013.

(8) Office space: A lease for office space for a five year and eight-month period commencing

27 April 2016.

(9) Leased land: A lease of land for a five-year period commencing 1 April 2017.

Annual Report and Financial Statements 2021NOTES TO THE FINANCIAL STATEMENTS

14. Subsidiary companies
At 31 December 2021, the Group had the following subsidiary undertakings:

Name of company

Shanta Gold Holdings Limited

Chunya Gold Holdings Limited

Shamba Limited

Shanta Gold Kenya (Guernsey) Limited

Rukwa Limited

Boulder Investments Limited

Shanta Gold Mauritius Limited

Shanta Mining Company Limited

Singida Resources Public Limited Company

Shield Resources Limited

Mgusu Mining Limited

Nsimbanguru Mining Limited

Shanta Gold Kenya Limited
(formerly Acacia Exploration (Kenya) Limited)

Chunya Resources Limited

Songea Resources Limited

Kakapo Resources Limited

Dondoro Resources Limited

Shanta Gold UK Limited

Holding

Country of Incorporation
and principal place of
business

100%

Guernsey

Cyprus

Mauritius

Tanzania

Kenya

Tanzania

United Kingdom

Principal activity

Holding Company

Investment Company

Exploration and mining

Dormant

15. Categories of financial assets and liabilities

US$000

31-Dec-21

31-Dec-20

Current assets measured at amortised cost

Trade and other receivables excluding tax and prepayments

Restricted cash (note 18)

Cash and cash equivalents

Total financial assets at amortised cost

Financial liabilities measured at amortised cost
Current financial liabilities

Loans and other borrowings (note 20)

Convertible loan notes (note 21)

Trade and other payables excluding tax

Non-current financial liabilities

Loans and other borrowings (note 20)

230

13,214

13,444

(2,823)

(17,169)

(19,992)

149

2,500

41,582

44,231

(5,713)

(9,999)

(12,208)

(27,920)

(3,454)

(4,270)

Total financial liabilities measured at amortised cost

(23,446)

(32,240)

There are no financial liabilities at fair value through profit or loss held by the Group as at
31 December 2021 (2020: US$ nil)

NOTES TO THE FINANCIAL STATEMENTS

Fair values
The fair values of the Group’s cash, trade and other
receivables and trade and other payables are considered
equal to the book value as they are all short term.

3. Other receivables: Other receivables include an amount of US$1,282,000 (2020:

US$1,282,000) paid to appeal certain findings of historic tax assessments carried out during
the year, for the which the Company has concluded there is a high chance of its appeal being
successful. In the event of a successful appeal, amounts paid to file the appeal are refundable
to the Company.

Loans and other borrowings and convertible loans are
initially measured at fair value and subsequently at
amortised costs. The fair values of the Group’s loans and
other borrowings are considered equal to the book value
as the effect of discounting on these financial instruments is
not considered to be material.

18. Restricted cash
An amount of US$2,500,000 was shown separately from
cash in 2020 as it had an external restriction placed
upon it in accordance with the Exim Bank loan facility
agreement (note 20). There was no restricted cash balance
at 31 December 2021 following the repayment of the Exim
Bank loan facility.

16. Inventories

US$000

Plant spares and consumables

Gold in ore stockpile

Gold in gold room and CIL

31-Dec-21

31-Dec-20

12,862

10,632

3,740

13,961

11,385

4,694

27,234

30,040

19. Trade and other payables

US$000

Trade payables

Accruals

31-Dec-21

31-Dec-20

11,090

6,079

6,818

5,390

17,169

12,208

The cost of consumable inventories consumed during the
year amounted to US$27.3 (2020: US$24.2 million). Plant
spares and consumables decreased in the year as a result of
additional procurement measures taken in 2020 to mitigate
potential supply chain risks associated with COVID-19
which were deemed not necessary in 2021.

17. Trade and other receivables

The Group has financial risk management policies in place
to ensure that the payables are paid within the credit time
frame. The Directors consider that the carrying amounts of
trade and other payables approximate their fair value.

20. Loans and other borrowings

US$000

31-Dec-21

31-Dec-20

US$000

Non-current assets

VAT receivable 1

Current assets

Prepayments 2

VAT receivable 1

Other receivables 3

31-Dec-21

31-Dec-20

22,698

27,560

Current liabilities
Silver stream1
Loans payable to Exim Bank less than 1 year2
Stanbic overdraft payable3

Lease liabilities (note 13)

1,363

4,171

1,512

7,046

2,218

1,431

4,649

Non-current liabilities
Silver Stream1

Lease liabilities (note 13)

1,158

1,000

665

2,823

2,695

759

3,454

6,277

1,899

2,636

1,178

5,713

3,691

579

4,270

9,983

1. VAT receivable: There is an express legislative framework in Tanzania to apply VAT due to a

taxpayer by way of repayment or setoff against tax due to the Tanzania Revenue Authority
(“TRA”). Based on confirmations received from the TRA in 2021, refund applications for the
periods January 2021 to May 2021 have been approved for repayment in 2022, totalling
US$4.1 million which is recognised as a current receivable.

In 2021, US$7.2 million of the brought forward VAT receivable was received as a cash refund/
offset in the year.

Refund applications for the period from November 2021 to December 2021, which amount
to US$2.2 million, require further audit by the TRA before being formally approved. Refund
applications for the period from July 2017 to June 2020, which amount to US$23.2 million,
have been initially rejected by the TRA and the Company intends to appeal this decision.
The legislation relevant to the Company’s refund applications for the period from July 2017
to June 2020 (summarised in Note 3) is clear and the Company expects its appeal to be
successful. The receivable balances which still need to be audited by the TRA and the disputed
balance have been classified as a non-current asset for the purposes of these financial
statements.

Included in the non-current portion of the VAT receivable is an adjustment for the expected
phasing of the VAT receipts. A US$2.7 million credit adjustment against the non-current VAT
receivable balance was recognised in the year and taken to the statement of comprehensive
income, representing the effect of time value of money on the refunds or offsets expected
in the future. The credit adjustment was calculated by discounting the expected refunds/
offsets to be received over the next three years at a risk adjusted Tanzanian forecast inflation
rate of 6%.

2 Prepayments: Prepayments at the year-end comprise advance payments made to suppliers
in accordance with the ordinary course of business and other administrative expenses paid
in advance.

Total loans and other borrowings

The finance expense recognised in respect of loans and
borrowings in the year amounted to US$62,000 (2020:
US$ 711,000).

(1) Silver Stream: The Company entered into a silver streaming agreement (“SSA”) with

Silverback Limited (“Silverback”), a privately held Guernsey-based investment company,
under which Silverback paid the Company an advanced payment of US$5.25 million on
closing. Silverback will also pay the Company an ongoing payment of 10 per cent. of the
value of silver sold at the prevailing silver price at the time of deliveries which will be
made annually. The SSA relates solely to silver by- product production from New Luika with
minimum silver delivery obligations totalling 608,970oz Ag over a 6.75-year period. There is
a requirement to settle any shortfall in silver delivery from the minimum obligation in cash.
The term of the SSA is 10 years during which time the Company will sell silver to Silverback
and receive ongoing payments of 10% of the silver sold at the prevailing silver price.
However, the Company has no minimum ounce obligations after 2022. The payable silver by
the Company to Silverback can be reduced should there be any plant expansion as verified by
an independent engineer. Following an assessment from an independent engineer during
2021, a plant expansion was verified as having occurred by the commissioning of a new mill
at NLGM. This change reduced the silver stream liability and has been accounted for as an
adjustment for the value in future estimates. The Silver Stream liability was re-estimated in
2021 to include the extension to life of mine plan. The liability is calculated using the forward
silver price and interest at the effective rate is imputed interest.

Annual Report and Financial Statements 2021

21. Convertible loan notes

As at 31 December 2020

1,043,465,532

104,347

31-Dec-21

31-Dec-20

Issued in year

4,793,126

479

As at 31 December 2021

1,048,258,658

104,826

US$000

Balance at 1 January

Value of silver transferred

Interest at the effective interest rate (note 7)

Adjustment for the value in future estimates (note 7)

Change in estimate

At 31 December

31-Dec-21

31-Dec-20

(5,590)

1,231

(1,341)

2,464

(617)

(3,853)

(4,236)

2,207

(1,443)

(940)

(1,178)

(5,590)

(2) Loans payable to Exim Bank: In 2020 the Company had an outstanding term loan

from Exim Bank (Tanzania) Limited (“EXIM”) repayable at the end of 2021. The loan had a
variable interest at 7.25% per annum and was secured against the New Luika Power Station.
US$2,500,000 of the originally drawn down balance was held as restricted cash in accordance
with the conditions of the agreement (note 18). During 2021, the loan was repaid in full.

(3) Stanbic overdraft payable: The Company entered into a revolving loan facility with Stanbic
Bank in Tanzania to fund short term working capital. The facility is for US$ 5 million of
which US$ 1 million has been drawn down at year end. Each draw down is repayable after
a maximum of 180 days and bears interest at 10% per annum. There are no securities held
against the loan.

US$000

At 1 January

Repayment

Cash paid interest

Coupon interest (note 7)

Accreted Interested (note 7)

Loan modification adjustment (note 7)

At 31 December

9,999

(9,807)

(662)

448

9,987

(1,321)

1,321

228

(216)

9,999

In 2020 the principal value of the remaining outstanding
notes not held directly or indirectly by Shanta Gold Limited
was US$9,807,000. During 2021, the Company repurchased
all the outstanding convertible loan notes at their principal
value of US$9,807,000.

22. Provision for decommissioning

US$000

Balance at 1 January

Increase in provision (note 12)

Change in discount rate (note 7)

Change in estimate (note 6)

Change in estimate capitalised within
property, plant and equipment (note 12)

31-Dec-21

31-Dec-20

6,346

675

1,026

(547)

8,426

591

(1,850)

(821)

At 31 December

7,500

6,346

The above provision relates to site restoration at New Luika
and nearby open pits, and at the open pit operations at
Singida. The fair value of the above provision is measured
by unwinding the discount on expected future cash flows
using a discount factor that reflects the risk-free rate of
interest. The yields of Tanzanian Sovereign Bonds with
a maturity profile commensurate with the anticipated
rehabilitation schedules have been used to determine
discount factors applied to anticipated future rehabilitation
costs. The provision represents the net present value of
the best estimate of the expenditure required to settle
the obligation to rehabilitate environmental disturbances

NOTES TO THE FINANCIAL STATEMENTS

caused by mining operations. The liability was re-estimated
in the year to align with the updated mining schedule
announced in 2020 and uses the latest Tanzanian Sovereign
Bond yields.

23. Share capital

Authorised

1,048,258,658 ordinary
shares of 0.01 pence each

31-Dec-21

31-Dec-20

£104,347

Issued and fully paid

Number

US$000

At 1 January 2020

Issued in year

787,375,086

256,090,446

78,738

25,609

118

149

150

4,793,126 ordinary shares were issued to Executive
Directors and Senior Management in the year in respect
of 2020 performance bonuses. All shares issued rank pari
passu in all respects with the existing shares in issue. The
Company has one class of ordinary shares which carry no
right to fixed income.

NOTES TO THE FINANCIAL STATEMENTS

24. Share-based payments
Equity-settled share option scheme
Options in issue are as follows:

Grant date

Exercise price

Final exercise date

26 September 2011

6 January 2012

25p

26 September 2021

23.13p

6 January 2022

There were no market conditions within the terms of the
grant of the options. The main vesting condition for all
the options awarded was that the employee or Director
remained contracted to the Company at the date of
exercise. All such options, subject to the remuneration
committee discretion, lapse 12 months after an employee
or Director leaves the Group before the options vest. All
options vest over a three-year period in tranches of 25%,
25% and 50% respectively.

Number of options at
31 December 2021

Number of options at
31 December 2020

1,170,000

500,000

1,170,000

1,670,000

Details of the share options outstanding during the year are:

Outstanding at 1 January

Lapsed share options

Outstanding at 31 December

Exercisable share options at the end of year

31 December 2021

31 December 2020

Number

Weighted average
exercise price (£)

Number

Weighted average
exercise price (£)

1,670,000

(500,000)

1,170,000

0.237

0.250

0.231

2,165,000

(495,000)

1,670,000

0.224

0.182

0.237

The Binomial formula is the option pricing model applied
to the grant of all options in respect of calculating the fair
value of the options. The following inputs to the Binomial
formula were used in calculating the fair value of options
granted in 2012:

Share price at grant

Option exercise price

Expected life of options

Expected volatility

Expected dividend yield

Risk free rate

Grant date

Fair value per share option

Exchange rate used

31 December 2012

£0.34

£0.25

£0.34

£0.30

£0.34

£0.35

10 years

55%

1.70%

55%

1.70%

55%

1.70%

23-Aug-12

£0.240

1.585

£0.229

1.585

£0.219

1.585

£0.23

£0.231

10 years

55%

1.70%

6-Jan-12

£0.148

1.560

Total charge over the vesting period

US$94,989

US$181,336

US$173,645

US$700,984

Annual Report and Financial Statements 2021NOTES TO THE FINANCIAL STATEMENTS

25. Net cash flows from operating activities

US$000

31-Dec-21

31-Dec-20

Profit before taxation for the year

1,000

39,001

Adjustments for:

Depreciation/depletion of tangible assets

16,039

Amortisation of right of use assets

Amortisation of intangible assets

Share based payment costs

Unrealised exchange (gains) / losses

Non-cash settlement of Silver Stream
obligation (note 20)

Finance income – decommissioning
provision (note 6)

Finance expense (note 7)

Operating cash flow before movement
in working capital

Decrease / (increase) in inventories

Increase in receivables

18,956

1,163

1,043

961

(63)

(1,231)

(2,207)

(3,012)

(1,850)

6,679

6,622

20,373

62,817

2,806

(4,431)

(2,950)

(7,705)

Increase / (decrease) in payables

4,961

(11,404)

Taxation paid

Interest received

23,709

(11,124)

40,758

(6,170)

Net cash flow from operating activities

12,586

34,608

NOTES TO THE FINANCIAL STATEMENTS

26. Reconciliation of liabilities arising from financing activities

US$000

At 1 January 2020

Cash flows

Non-cash flows

Silver Stream

Finance lease obligations recognised

Interest accruing in the period

Effects of foreign exchange

Reclassification from non-current to current
liabilities

At 31 December 2020

Cash flows

Non-cash flows

Silver Stream

Finance lease obligations recognised

Interest accruing in the period

Effects of foreign exchange

Reclassification from non-current to current
liabilities

Non-current
loans and other
borrowings
(Note 20)

5,219

1,020

1,141

(3,110)

4,270

869

(1,685)

Current loans and
other borrowings
(Note 20)

14,026

(12,728)

Convertible
loan notes
(Note 21)

9,987

(1,321)

Restricted cash
(Note 18)

(2,500)

1,333

9,999

(10,469)

(2,500)

2,500

470

Total

26,732

(14,049)

(2,207)

1,216

5,700

17,482

(10,915)

(1,230)

869

135

(64)

6,278

(2,207)

196

3,226

3,110

5,713

(2,946)

(1,231)

(335)

(63)

1,685

At 31 December 2021

3,454

2,824

27. Financial risk management
The Group is exposed to risks that arise from its use of
financial instruments. This note describes the Group’s
objectives, policies and processes for managing those
risks and the methods used to measure them. Further
quantitative information in respect of these risks is
presented throughout these financial statements.

There have been no substantive changes in the Group’s
exposure to financial instrument risk nor its objectives,
policies and processes for managing those risks or the
method used to measure them from the previous period
unless otherwise stated in this note.

Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises are as follows:

◼ Trade and other receivables
◼ Cash and cash equivalents
◼ Trade and other payables
◼ Loans and borrowings
◼ Asset loans

General objectives, policies and processes
The Board has overall responsibility for the determination
of the Group’s risk management objectives and policies
and, whilst retaining ultimate responsibility for them, it
has delegated the authority for designing and operating
processes that ensure the effective implementation of the
objectives and policies to the Group’s finance function.
The Board receives quarterly information from the Group’s
management through which it reviews the effectiveness
of the processes put in place and the appropriateness of
the objectives and policies it sets. The overall objective
of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group’s
competitiveness and flexibility.

The Group is exposed to commodity price volatility,
interest rate risks, credit risks, liquidity risks and currency
risks arising from the financial instruments it holds. The risk
management policies employed by the Group to manage
these risks are set out below.

Interest rate risk

27.1
The Group’s exposure to interest rate risk relates to the
Group’s cash and cash equivalents and various loan
facilities. Interest rate risk is the risk that the value of
financial instruments or future cash flows will fluctuate due
to the changes in market interest rates. All cash deposits as

Annual Report and Financial Statements 2021NOTES TO THE FINANCIAL STATEMENTS

The maturity of financial liabilities is as follows:

US$000

Loans and other
borrowings

Lease liabilities

Silver Stream

Other payables and
accruals

US$000

Loans and other borrowings

Lease liabilities

Silver Stream

Convertible loan notes

Other payables and
accruals

31 December 2021

Less than
3 months

3 months
to 1 year

Later than
one year but
no later than
five years

(1,000)

(195)

(17,169)

(470)

(1,158)

(759)

(2,695)

(17,364)

(2,628)

3,454

31 December 2020

Less than
3 months

3 months
to 1 year

(1,306)

(202)

(12,783)

(1,344)

(867)

(1,899)

(10,447)

Later than
one year but
no later than
five years

(611)

(3,691)

(14,291)

(14,557)

(4,302)

27.4 Currency risk
Currency risk is the risk that the value of financial
instruments will fluctuate due to change in foreign
exchange rates.

Currency risk arises when future commercial transactions
and recognised assets and liabilities are denominated in
the currency that is not the Group’s presentational currency.

The Group is exposed to foreign exchange risk arising
from various currency exposures primarily with respect to
the Tanzanian Shilling, Euro, Kenyan Shilling and Sterling,
however most transactions are in USD. The Group’s
management monitors the exchange rate fluctuations on a
continuous basis and acts accordingly.

well as loans are at floating rates and the Group exposes
itself to the fluctuation of the interest rate that is inherent in
such a market.

The Group’s cash and cash equivalents are carried at an
effective interest rate of 1% (2020: 1%).

The revolving loan facility with Stanbic Bank bears interest
at 10% per annum. (2020: Nil)

27.2 Credit risk
Credit risk arises when a failure by counterparties to
discharge their obligations could reduce the amount of
future cash inflows from financial assets on hand at the
reporting date.

The Group’s exposure to credit risk is explained below:

a) Trade and other receivables
The Group generates revenue from the sale of gold. In the
event of a default by a debtor of amounts due from trade
and other receivables, the Group will be able to meet those
costs. Sales are made principally to one customer. There
has been no change in customer during the year. However,
the Group has no significant credit risk exposure as majority
of the sale is paid for on the same day or soon after the
delivery. The Group did not recognise any impairment
during the year and there were no other receivables that
were past due.

b) Cash and cash equivalents
The Group has significant concentration of credit risk
arising from its bank holdings of cash and cash equivalents.

To manage this exposure, the Group has a policy
of maintaining its cash and cash equivalents with
counterparties that have a credit listing of at least A from
independent rating agencies. Given this high credit rating,
the Directors do not expect any counterparty to fail. The
Board has reviewed the maximum exposure on the Group
financial assets and has concluded that the carrying values
as at reporting date are fully recoverable.

27.3 Liquidity risk
Liquidity risk is the risk that arises when the maturity of
assets and liabilities does not match. An unmatched
position potentially enhances profitability but can also
increase the risk of losses. The Group has procedures with
the object of minimising such losses such as maintaining
sufficient cash and other highly liquid current assets. Cash
and cash equivalents are placed with financial institutions
on a short-term basis reflecting the Group’s desire to
maintain high levels of liquidity in order to enable timely
completion of transactions. All financial liabilities have
a maturity of less than three years or have no specific
repayment dates.

NOTES TO THE FINANCIAL STATEMENTS

(US$000)

Trade and other receivables

Cash and cash equivalents

Trade and other payables

Loans and other borrowings

Net exposure

(US$000)

Trade and other receivables

Cash and cash equivalents

Trade and other payables

Loans and other borrowings

Convertible loan notes

Net exposure

ZAR

(227)

ZAR

USD

1,485

12,967

(10,449)

(5,731)

(1,728)

USD

40,796

(9,014)

(8,456)

(9,999)

13,347

TZS

(5,117)

(5,035)

TZS

1,385

(2,846)

31 December 2021

EUR

(81)

(546)

(627)

GBP

118

(341)

(223)

31 December 2020

EUR

(1,472)

GBP

615

(64)

(1,379)

(1,472)

551

KSH

(954)

(880)

KSH

(284)

(55)

(224)

Total

1,513

13,214

(17,169)

(6,277)

(8,721)

Total

1,431

41,582

(12,208)

(9,983)

(9,999)

10,823

The Group’s policy is, where possible, to allow Group
entities to settle liabilities denominated in their functional
currency. In order to monitor the continuing effectiveness
of this policy, the Board reviews quarterly the liabilities,
analysed by the major currencies held by the Group of
liabilities due for settlement and expected cash reserves.

The following significant exchange rates applied
during the year:

Average rate

Closing rate

2021

0.0004

1.1832

1.3757

0.0091

2020

0.0004

1.1412

1.2844

0.0090

2021

0.0004

1.1395

1.3499

0.0092

2020

0.0004

1.2259

1.3490

0.0092

TZS : US$

EUR : US$

GBP : US$

KSH : US$

27.5 Capital risk management
The Group’s objectives when managing capital are to
safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and
benefit for other stakeholders and to maintain an optimal
capital structure to reduce the costs of capital.

In order to maintain or adjust the capital structure the
Company may return capital to shareholders and issue new
shares, or when profitable, adjust the amount of dividends
paid to shareholders.

28. Segment information
The Group had two operating segments during the year:

◼ Tanzanian Assets – gold mining, processing, exploration,

development and related activities in Tanzania

◼ West Kenya Project – gold exploration activities in Kenya

Segment results, assets and liabilities include items
directly attributable to a segment, as well as those that
can be allocated on a reasonable basis. These have been
disaggregated as follows:

2021

Tanzanian
Assets

West Kenya
Project

Total

103,571

(1,152)

103,571

(7,320)

(6,168)

11,987

(2,700)

548

(1,515)

(7,168)

1,152

(7,320)

4,667

(2,700)

548

(1,515)

(7,168)

(6,168)

US$000

Revenue

Segment result

Operating profit / (loss)

Non-operating expenses

Financial income

Financial expense

Taxation

(Loss) attributable to equity
holders of the parent
Company

Segment assets

Segment liabilities

Non-current asset additions

184,896

(47,768)

19,723

20,609

(954)

205,504

(47,722)

19,752

Annual Report and Financial Statements 20212020

Tanzanian
Assets

West Kenya
Project

Total

147,431

18,150

44,700

1,870

(6,622)

(21,798)

18,150

147,431

(947)

17,203

(947)

43,753

1,870

(6,622)

(21,798)

17,203

US$000

Revenue

Segment result

Operating profit / (loss)

Financial income

Financial expense

Taxation

Profit / (Loss) attributable
to equity holders of the
parent Company

Segment assets

Segment liabilities

Non-current asset additions

209,583

(64,164)

14,478

20,800

(297)

19,979

230,383

(64,461)

34,457

29. Related party transactions
Details of the remuneration of the Directors, who are key
management personnel, are contained within note 8 and
the Remuneration Committee Report on pages 29 to 31.
Executive Directors are considered key management.

30. Commitments
The Directors confirm that the Group had capital
commitments of US$2.8 million (2020: US$3.6 million)
relating to underground mining equipment at New Luika
and long-lead capital items on order at Singida.

31. Dividend per share

US$000

31-Dec-21

31-Dec-20

Final dividend for 2020 of £0.001 per
ordinary share

Interim dividend for 2021 of £0.001 per
ordinary share

1,486

2,972

A final dividend in respect of the year ended 31 December
2021 of £0.001 per ordinary share, equivalent to
approximately US$ 1.5 million, is to be proposed at the
annual general meeting. These financial statements do not
reflect this dividend payable.

32. Contingent liabilities
Contingent liabilities identified as at 31 December 2021
have been summarised as follows:

(i) Under the terms of the Share Purchase Agreement

for the West Kenya Project acquisition, US$0.5 million
of cash consideration is conditional on satisfaction of
certain conditions relating to the Company obtaining
required approvals in respect of the Gold Rim Project
Licences. These conditions had not been met as at 31
December 2021 and no amount has been recognised.

NOTES TO THE FINANCIAL STATEMENTS

(ii) One of the Company’s subsidiaries, Shanta Gold Kenya
Limited, received an Income Tax Assessment on 15
November 2021 from the Kenya Revenue Authority (the
“KRA”) in respect of a review conducted regarding the
disposal by three subsidiaries of Barrick of their interests
in the West Kenya Project during 2020. The assessment
constitutes a formal tax demand. The key finding
highlighted within the correspondence being in respect
of corporation tax falling due on an assessed net gain
arising upon an assessed indirect transfer of interest in
the West Kenya Project.

Legal advice has been obtained in respect of the
findings. In respect of the assessed net gain arising
upon an assessed indirect transfer of interest in
the West Kenya Project, the legal advice obtained
concludes that such taxes are payable by the seller in
the transaction. Furthermore, specific warranties within
Shanta’s Sale and Purchase Agreement with Barrick
provide protections for the Company in respect of
this matter.

No liability or provision has been recognised within the
2021 financial statements in respect of the assessment
from the KRA and, whilst any future payments by the
Group in respect of these matters could be material,
the amount of the payments cannot as yet be reliably
determined and furthermore the likelihood of such
future payments cannot be considered to be probable.
Subsequent to year end, Barrick reached a settlement
with the KRA, thereby settling all related obligations.

(iii) One of the Company’s subsidiaries, Shanta Gold
Kenya Limited (“SGKL”), received a Withholding
Vat demand on 23 December 2021 from the Kenya
Revenue Authority (the “KRA”) relating to the alleged
failure by Shanta Gold Kenya Limited to withhold a
2% withholding tax on vat on payments to suppliers.
The KRA Demand Letter does not indicate whether
it is a formal assessment and the manner in which
the Company should object to it as required under
Kenyan Tax Law.

The Company engaged with its tax and legal advisors
to review the grounds of the demand who, together
with SGKL, hold the position that the Company was
only notified of its appointment as a WHVAT on 24
November 2021 and has been compliant with the
provisions of Section 42A of the TPA since then.
Based on the legal advice received and the grounds
of objection SGKL is of the view that for the period
January 2016 to October 2021 the demand is not
legally justifiable and therefore no liability exists.

No liability or provision has been recognised within the
2021 financial statements in respect of the Demand
from the KRA. Furthermore, in the unlikely event any
amount become payable by the Company, per the SPA
agreement with Seller, the Company can make a breach
of warranty claim for any tax that becomes payable
subject to the aggregate financial limits set out under
the SPA being USD 2,000,000.

The Directors confirm that they are not aware of any
other contingent liabilities as at 31 December 2020
(2019: US$Nil).

NOTICE OF THE ANNUAL GENERAL MEETING

Notice of the Annual General Meeting

Shanta Gold Limited
(A non-cellular Company limited by shares incorporated under the laws of the
Island of Guernsey with registered number 43133) (the “Company”).

Notice is hereby given that the Seventeenth Annual General Meeting of the shareholders of the Company will be held
at 11 New Street, St Peter Port, Guernsey, GY1 3EG on 15 June 2022 at 12.00pm (the “Meeting”) for the purpose of
considering and, if thought fit, passing the following resolutions numbered 1–9 below as ordinary resolutions:

Ordinary resolutions
1.

To receive and consider the profit and loss account and the balance sheet of the Company for the financial year
ended 31 December 2021.

To receive and consider the report of the directors of the Company.

To receive and consider the report of the auditors of the Company.

To approve the Directors’ remuneration paid for the year to 31 December 2021 as detailed in the 2021 Annual Report
and Accounts.

To approve the Non-Executive Directors’ aggregate fees for the period between 1 January 2022 to 31 December
2022 inclusive to be US$405,000

To authorise the directors to fix the remuneration of the auditors as the directors see fit.

To consider and if thought fit re-elect Luke Leslie as director of the Company who retires by rotation and who makes
himself available for re-election as a director of the Company

To re-appoint BDO LLP as the auditors of the Company.

To approve a final dividend proposed by the Directors of 0.10 pence per share.

Dated 9 May 2022

By order of the board

Director

Any member entitled to attend and vote at the above Meeting is entitled to appoint one or more proxies, who need not
be members of the Company, to attend the Meeting and vote on his behalf.

FORM OF PROXY

Form of proxy

Shanta Gold Limited
(A non-cellular Company limited by shares incorporated under the laws of the
Island of Guernsey with registered number 43133) (the “Company”).

As a shareholder of the Company you have the right to attend, speak and vote at the Seventeenth Annual General Meeting of the
Company (the “Meeting”). If you cannot, or do not want to, attend the Meeting, but still want to vote, you can appoint someone to
attend the Meeting and vote on your behalf. That person is known as a ‘proxy’.

I/We

being (a) member(s) of the Company entitled to attend and vote at meetings, hereby appoint:

failing whom, the chairman of the Meeting, as my/our proxy to vote for me/us on my/our behalf at the Meeting to be held at 11 New
Street, St Peter Port, Guernsey, GY1 2PF on 15 June 2022 at 12.00pm and at any adjournment thereof and to attend and vote thereat as
indicated below. To allow effective constitution of the Meeting, if it is apparent to the Chairman that no shareholders will be present in
person or by proxy, other than by proxy in the Chairman’s favour, then the Chairman may appoint a substitute to act as proxy in his
stead for any shareholders provided that such substitute proxy shall vote on the same basis as the Chairman.

Please indicate with an ‘X’ in the appropriate space how you wish your votes to be cast (see Note 4).

For

Against

Vote
withheld

Ordinary Resolutions—Ordinary Business

1. Ordinary Resolution to receive and consider the profit and loss account and the balance

sheet of the Company for the financial year ended 31 December 2021.

2. Ordinary Resolution to receive and consider the report of the directors of the Company.

3. Ordinary Resolution to receive and consider the report of the auditors of the Company.

4. Ordinary Resolution to approve the Directors’ remuneration paid for the year to 31 December

2021 as detailed in the 2021 Annual Report and Accounts.

5. Ordinary Resolution to approve the Non-Executive Directors’ aggregate fees for the period

between 1 January 2022 to 31 December 2022 inclusive to be US$405,000.

6. Ordinary Resolution to authorise the directors to fix the remuneration of the auditors as the

directors see fit.

7. Ordinary Resolution to consider and if thought fit re-elect Luke Leslie as director of the

Company who retires by rotation and who makes himself available for re-election as a director
of the Company.

8. Ordinary Resolution to re-appoint BDO LLP as the auditors of the Company.

9. Ordinary Resolution to approve a final dividend proposed by the Directors of 0.10 pence

per share.

Date

Signature(s) or common seal (see Note 3)

NOTES TO THE PROXY FORM

Notes to the proxy form

1. A proxy need not be a member of the Company.

2. If you do not indicate how you wish your proxy to use your vote in a particular manner, the proxy will

exercise his/her discretion as to how he/she votes and as to whether or not he/she abstains from voting.

3. The Form of Proxy must be in writing under the hand of the appointer or of his/her attorney duly

authorised in writing, or if the appointer is a corporation under its common seal or under the hand of the
officer or attorney duly authorised.

4. If you wish your proxy to cast all of your votes for or against a resolution you should insert an “X” in the

appropriate box. If you wish your proxy to cast only certain votes for and certain votes against, insert the
relevant number of shares in the appropriate box.

5. The “Vote Withheld” option is provided to enable you to instruct your proxy to abstain from voting on a
particular resolution. A “Vote Withheld” is not a vote in law and will not be counted in the calculation of
the proportion of the votes “For” or “Against” a resolution.

6. Forms of Proxy, to be valid, must be lodged, together with the power of attorney or other authority (if

any) under which it is signed, or a notarially certified copy of such power of authority, at the Company’s
registered office by fax +44 1481 729200 or email to: corporate.secretarial.gg@vistra.com or posting the
original to: PO Box 91, 11 New Street, St Peter Port, Guernsey GY1 3EG not less than 48 hours before
the time appointed for holding the meeting or adjourned meeting.

7. In the case of joint holders, the signature of any one of them will suffice, but if a holder other than the

first-named holder signs, it will help the Registrars if the name of the first-named holder is given.

8. Any alteration to this Form of Proxy must be initialled.

9. Completion and return of this Form of Proxy does not preclude a member subsequently attending and

voting at the Meeting.