Annual Report and
Financial Statements
2022
Contents
About Shanta Gold
1
Board of Directors
3
Chairman’s Statement
5
Chief Executive Officer’s Review
7
Directors’ Report
19
Corporate Governance Statement
23
Remuneration Committee Report
31
Risk Report
35
Sustainability Committee Report
37
Audit Committee Report
43
Independent auditor’s report to the members of
Shanta Gold Limited
45
Consolidated statement of comprehensive income
53
Consolidated statement of financial position
54
Consolidated statement of changes in equity
55
Consolidated statement of cash flows
56
Notes to the financial statements
59
Notice of the Annual General Meeting
86
Form of proxy
88
Notes to the proxy form
89
1
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 625 Koz grading 2.91 g/t, and
exploration licenses covering approximately 800 km2 in
the country.
Alongside New Luika and Singida, Shanta also owns the
high-grade West Kenya Project in Kenya and licenses with
resources of 1.76 million ounces including 1.14 million oz
in the Indicated category. With a healthy balance sheet, a
growing diversified portfolio and a maiden dividend paid
in 2021, Shanta offers a resilient investment opportunity for
the near and long-term. Shanta is quoted on London’s AIM
market (AIM: SHG) and has approximately 1,051 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.
About Shanta Gold
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 2022
ABOUT SHANTA GOLD
ABOUT SHANTA GOLD
2
ABOUT SHANTA GOLD
Board of Directors
Anthony Durrant
Non-executive Chairman
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
Chief Executive Officer, Director
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 Leslie
Chief Financial Officer, Director
(resigned 28 March 2023)
Luke is a natural resources
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.
Luke is an alumnus of Edinburgh
University and Harvard
Business School.
3
Annual Report and Financial Statements 2022
BOARD OF DIRECTORS
Ketan Patel
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.
Michelle Jenkins
Non-executive Director
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 formerly
as the Executive for Finance and
Administration (South Africa)
for Orion Minerals Ltd and
currently as a Non-Executive
Director of Kumba Iron Ore
Limited. Ms Jenkins previously
worked for the Pangea Group.
She chairs the Company’s Audit
Committee.
Keith Marshall
Non-executive Director
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 a former 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.
4
BOARD OF DIRECTORS
5
Chairman’s Statement
Despite the challenges posed by global financial trends
seen in 2022, Shanta remained resilient and adaptable,
ensuring that we continued to serve our shareholders and
other stakeholders effectively. We also remained committed
to corporate social responsibility, and achieved impressive
operational and performance results while maintaining an
outstanding safety record.
The past year was a transition year for the company where
the ongoing construction of the new Singida Gold Mine
and a successful exploration campaign at West Kenya laid
the groundwork for transforming Shanta into a 100koz per
year gold producer with an attractive investment case.
Luke Leslie, Chief Financial Officer, has informed the board
of his decision to step down from his role in order to pursue
other opportunities. I would like to take this opportunity to
extend my thanks to Luke for his contribution to Shanta in
particular over the last 5 years as CFO and Head of M&A.
During this time he was instrumental in the successful
turnaround of Shanta which included the acquisition of the
West Kenya Project in 2020. On behalf of the board, we
wish him all the best in his future endeavours.
Performance and operating highlights
Once again, Shanta’s exploration team have managed to
replace mined ounces for the 4th consecutive year and
extend New Luika’s mine life, now through to Q1 2028
from Q4 2026. This ensures long-term, sustainable returns
for our shareholders. The ongoing exploration campaign
at Shanta’s West Kenya Project continued in 2022 resulting
in the resource base increasing to 1.76 Moz, an increase
from 1.55 Moz at the beginning of the year, and Indicated
Resources increasing to 1.14 Moz. Our West Kenya project
now accounts for 48% of our total resources.
During the year, the Construction of the Singida Gold Mine
progressed as planned and on budget, a testament to
the project management team given the inflationary cost
pressures seen this year throughout the industry. With first
gold pour planned for March 2023, Singida is currently
forecast to add 45-50% to the Group production profile,
enhancing the Company’s short-term future and diversifying
the asset portfolio. We are confident in delivering further
sustainable returns to our shareholders while transforming
the economic potential of the local region in which the
mine operates.
Corporate Social Responsibility (CSR)
Shanta recognises that its success is largely as a result
of the wide ranging, powerful benefits of a strong CSR
strategy. We recognise the importance of entrenching a
local content strategy throughout our operations including
job creation and employment, payments to government
and local investment. In 2022, Shanta’s direct economic
contributions totalled US$148.8 million, which includes:
US$53.7 million in cash operating costs; US$13.6 million
in employee wages and benefits; US$54 million in capital
expenditure; US$26.8 million in royalties, taxes, duties,
levies, and other payments to government, and US$0.3
million to community investments and donations. Of the
total economic value distributed, 95% was attributed
to Tanzania, with the remaining 5% to exploration and
evaluation activities in Kenya.
Throughout the year, the company also supported various
community initiatives to directly support local communities
which included assisting over 2500 farmers with farming
donations and support, improving the infrastructure
of various primary and secondary schools in villages
surrounding our mines by building new ablution blocks,
classrooms, providing desks and learning materials, The
company also sponsored advanced medical equipment
to local village dispensaries and maternity wards near the
New Luika Gold Mine. These are just some of the initiatives
undertaken in the year and highlights our commitment to
the local communities in which we operate.
Environmental, Social and Governance (ESG) reporting
As a responsible gold miner, we are committed to ensuring
transparent and high quality ESG and sustainability
reporting as we understand that investors and other
stakeholders consider governance as critical to business
success. In 2022, Shanta released its inaugural 2021
Sustainability Report where we looked to strengthen our
sustainability governance by identifying the policy gaps
that exist and benchmarking against peers. The 2022 report
due to be announced in April 2023 will build on and refine
our ESG reporting.
Annual Report and Financial Statements 2022
CHAIRMAN’S STATEMENT
Year ahead
As Singida moves into production and transitions from a
cost centre to a cash generator, our exploration focus will
pivot back to mine life extension at both the Singida and
New Luika mines, in order to unlock long term shareholder
value. Resource growth at West Kenya continues to impress
and is an important future pillar of our investment case.
Shanta will continue to develop this resource in 2023 and
progress the Feasibility Study workstream with the goal of
developing a mine in Kenya in the medium term.
With the increasing diversity and complexity of our
operations, our Board concluded in our annual Board
Review that we should appoint additional Independent
Non-Executive Directors and we expect to make
announcements on this in the near future
Finally, I would like to thank the Shanta team and our wider
stakeholders for their continued commitment, support, and
efforts which have delivered the encouraging results seen in
this annual report.
Anthony Durrant
Chairman
28 March 2023
6
CHAIRMAN’S STATEMENT
7
Chief Executive Officer’s
Review
2022 was a significant year for Shanta
and I am pleased that the Company
enjoyed a strong end to the year at
all of our assets across the portfolio.
Our producing mine New Luika saw
record annual throughput and full
year production of 65,209 ounces,
an 18% increase vs. last year’s
production figures.
Despite a near miss on guidance, I am happy to report
that there are numerous initiatives underway and in place
for 2023 to decrease operational risks and optimise
production. These include the team adding 40% to the
open pit mining capacity with the addition of mining
equipment from a second contractor as well as Shanta
taking the delivery of a newly purchased underground
production rig.
The completion of construction at the Singida Gold Mine is
fast approaching having been kept on track and on budget
throughout the year. Singida will transform Shanta into a
100,000 oz/pa gold producer with a diversified resource
base. Group-wide resources have increased to 3.7 Moz
from 1.2 Moz five years ago.
Our exploration campaign conducted at West Kenya during
the year, continued to deliver, with some of the best drilling
results the Company has seen in its history. As we diversify
our portfolio in Tanzania with Singida’ s first gold pour in
March 2023, West Kenya demonstrates the Group’s clear
long term growth potential to shareholders.
Last year, we released our inaugural Sustainability Report,
which highlighted our dedication as a company to
operating and collaborating in a responsible manner. In
2022, we continued our ESG journey ensuring that our
sustainability reporting accurately reflects our commitment
to sustainable practices and responsible business
operations. We look forward to building on this progress in
the coming years and continuing to prioritise sustainability
in all aspects of our business.
Highlights
Exceptional safety record
As always, the wellbeing of all our employees is our
number one priority, and we have an uncompromising
approach to safety standards. Operations at the New
Luika Gold Mine achieved a Total Recordable Injury
Frequency Rate (“TRIFR”) per 1 million hours worked of
1.27 and the Singida team achieved an outstanding 0.85,
both significantly below the global industry average of
2.90, as measured by the International Council of Mining
and Metals.
The Singida Gold Mine
Singida remains on track for first gold pour in March 2023
transforming Shanta Gold into a 100,000 oz/pa producer
and diversifying Group cash flow. The Singida project
team has done a fantastic job over the year keeping the
construction of the Singida mine on schedule and on
budget. While the rest of the industry was impacted by
the global inflationary pressures, no material capital cost
inflation has been incurred in the construction costs owing
to orders for major capital items being placed in early 2021
prior to inflationary pressures and excellent supervision and
flexibility from the Singida team in Tanzania.
As at year end, the Singida project was 90% complete
with total project capital expenditure amounting to $26.8
million in 2022, and $32.4 million to date. Initial startup
operations have also been significantly de-risked with the
stockpile of crushed ore now at 32,300 tonnes (equal to
over one month of supply) and the Run of Mine stockpile of
166,600 tonnes grading an average of 2.58 g/t containing
13.8 koz of gold (equal to approximately 4 months of
processing).
In terms of long term potential, geological mapping which
took place in 2022 shows upside potential for mine life
extension. To help achieve this goal, Shanta welcomed
back George Kondela, the new General Manager of
Singida, in January 2023 to lead the Singida Gold Mine and
mine life extension efforts. George is a trained geologist
and has significant experience in this area with a track
record of successful reserve life expansions. The project’s
location within a greenstone deposit also means it is well
suited to further exploration growth.
Annual Report and Financial Statements 2022
CHIEF EXECUTIVE OFFICER’S REVIEW
Shanta’s impressive safety standards are being carried
through to its Singida operations with a robust health and
safety framework having been maintained throughout
construction.
We are committed to developing and promoting local
talent at the Singida Gold Mine and have directly employed
474 employees and contractors, all of whom are Tanzanian
nationals. As we continue to invest in community initiatives
that benefit the people of the Ikungi region, we are
confident that the project will deliver transformational
change. Our efforts have already begun with the upgrade
of local schools in Malumbi and Samburu villages,
improvement of roads, several water projects, and the
renovation of a local dispensary. We are pleased with these
early steps and look forward to making a positive impact in
the region.
The West Kenya Project
The West Kenya project has achieved impressive growth
and results, as evidenced by the latest Mineral Resource
Estimate which has increased to 1.76 Moz, while Indicated
Resources increased to 1.14 Moz. The Indicated Resource
ounces also demonstrate high-grades, averaging 11.45
g/t Au across 722 Koz, indicating potential for high margin
cash flow in future operations.
In 2022, the Ramula target was one of the focus areas for
exploration drilling which has contributed to the significant
increase in Indicated Resources throughout West Kenya.
The potential for open pit mining at Ramula is particularly
appealing in terms of cost and timing, adding to the
attractiveness of the asset’s development.
As we move towards the first gold pour at Singida in March
2023, the ongoing exploration success at West Kenya is
a source of great excitement for the Shanta team and all
stakeholders. Our unique investment proposition, driven
by a clear growth story and an ever-increasing production
profile, sets us apart from our peers and gives us
confidence in the Company’s near to mid-term prospects.
In 2023, the West Kenya Project Feasibility Study
workstream, led by an internal owners team, will continue.
The team will focus on developing and evaluating mining
conceptual models, which marks an exciting initial step
towards converting the West Kenya Project from an
exploration project to a producing entity.
Portfolio-wide exploration
In 2022, Shanta has once again succeeded in extending
the life of NLGM through the addition of new reserves,
now projecting to run until Q1 2028, as compared to Q4
2026, as measured 12 months ago at the end of 2021.
This marks the fourth consecutive year in which the mine
life has been extended by at least one year through
successful exploration, highlighting the importance of this
approach in achieving long-term, sustainable returns for our
shareholders.
In 2022 we invested US$2.1 million in exploration in
Tanzania which is less than half of what was spent in 2021.
This was due to prioritising funding for the construction of
Singida. Despite this reduction, we added 92,500 ounces of
new reserves at NLGM.
Our Tanzanian assets contain a total of 625,000 oz of
compliant gold reserves with an average grade of 2.91 g/t.
These reserves are divided between the NLGM and Singida
projects, with NLGM contributing 394 Koz of reserves
grading at 2.85 g/t, and Singida contributing 231 Koz of
reserves grading at 3.01 g/t. Future mine life potential
comes from a further 1.2 Moz of resources at NLGM and
Singida, not currently in the mine plan and available for
future exploration.
With the Singida Gold Mine transitioning from a cost
center to a cash generator as it moves into production,
our exploration focus will shift towards extending the mine
life to create long-term value for shareholders. Singida is
a greenstone project located within the highly productive
Lake Victoria Gold Field and has only undergone around
75,000 meters of drilling, presenting a significant
opportunity for reserve addition and mine life extension.
Resource growth at West Kenya remains impressive and
serves as an important aspect of our investment strategy.
At present, our West Kenya project accounts for 48% of our
total resources.
Status of VAT refunds
At the end of the year, the Company had a VAT receivable
balance of US$29.3 million, of which $23.1 million gross
relates to the Company’s input VAT refund application for
the period from July 2017 to June 2020. The Company
has sought comprehensive legal and tax guidance to
recover the VAT and is pursuing a settlement to recover the
remaining balance, as detailed in note 3.
Cash refunds and offsets of US$9.6 million were received
in the year in respect of post June 2020 VAT, indicating
positive engagement with the Tanzanian Revenue Authority
(“TRA”). The remaining current VAT receivable is awaiting
verification audit, after which it can be utilised for additional
refunds or offsets against corporate income tax.
Operations review
New Luika Operations Review
2022 saw several operating achievements which include a
record annual throughput of 874,703 tonnes milled, which
represents a 6% increase from 2021, and gold production
of 65,209 ounces, up 18% from the previous year, and
4% below the annual production target of 68,000 oz. This
near miss can be attributed to operational challenges seen
at New Luika, where steps have been taken to decrease
operational risk.
8
CHIEF EXECUTIVE OFFICER’S REVIEW
New Luika Gold Mine
Operations Review
Tonnes ore mined
Grade (g/t)
Tonnes ore milled
Recovery (%)
New Luika Gold Mine operations
9
Annual Report and Financial Statements 2022
CHIEF EXECUTIVE OFFICER’S REVIEW
Gold production (ounces)
Silver production (ounces)
Gold sales (ounces)
Realised gold price (US$/oz)
10
CHIEF EXECUTIVE OFFICER’S REVIEW
New Luika Gold Mine
Operations Review
New Luika Gold Mine quarterly breakdown
Tonnes ore mined
Grade (g/t)
Tonnes ore milled
Recovery (%)
11
Annual Report and Financial Statements 2022
CHIEF EXECUTIVE OFFICER’S REVIEW
Gold production (ounces)
Silver production (ounces)
Gold sales (ounces)
Realised gold price (US$/oz)
12
CHIEF EXECUTIVE OFFICER’S REVIEW
13
The State-owned grid experienced power instability
throughout the country, which led to a reduction in the
reliability of power for underground equipment at NLGM.
In Q4, the contribution of State-grid power to NLGM
improved with the arrival of seasonal rains and the increase
of hydro power in country. A long-run average of 25%
of power sourced from the State-grid is usually expected
when power shortages are supplemented by Shanta’s HFO
power station.
The reduced availability of open pit and underground
mining equipment impacted the mine plan in H2. To
support surface operations, open pit mining equipment
arrived at NLGM in December 2022 from a second mining
contractor, increasing the open pit mining fleet capacity by
around 40% by the end of the year.
In addition, a newly purchased Sandvik underground
production rig was fully commissioned in December 2022,
resulting in a 94% increase in total underground production
meters to 10,439 meters compared with the first 11
months average of 2022 of 5,377 meters. At the end of
December 2022, there were 10 underground stopes ready
and available for drilling compared to a NLGM base case
average of 3 at any one time.
AISC1 for the year was US$1,271/oz and within the AISC
cost guidance of US$1,150–1,275 /oz set for 2022 and a
6.4% decrease on the 2021 AISC. The improvement was
as a result of more ounces produced and rigorous cost
management during a year impacted by global inflation.
Financial overview
Turnover for the year from sales of gold amounted to
US$114.1 million, compared to US$103.6 million in 2021,
a 10.1% increase attributable to increase in gold ounces
recovered. Shanta sold 63,695 oz of gold in 2022 (2021:
57,517 oz) with all sales completed at spot price, with an
average selling price of US$1,791 /oz during 2022 (2021:
US$1,801/oz).
Operating profit for the year amounted to US$6.0
million (2021: US$4.7 million), the increase being mainly
attributable to a combination of more revenue being
earned in the period and less expenditure relating to the
West Kenya Project in 2022 when compared to 2021.
EBITDA2 was US$23.2 million (2021: US$19.0 million).
Following committed and positive engagement with the
Tanzania Revenue Authority (“TRA”), total VAT cash refunds
of US$4.1 million were received by the Group in 2022, with
a further US$5.5 million offset against income tax liabilities.
1
AISC figures published include development costs and are in line with the WGC
definition. Please note that this is a non-GAAP measure
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.
US$4.6 million has also been verified for refund by the TRA
in Q1 2023.
At the end of December 2022, remaining gold price
protection outstanding relating to the Standard Bank
loan and Working Capital facility in the form of Zero Cost
Collars totalled 15 Koz including 8 Koz covering the period
January to June 2023 between US$1,600–1,950 /oz, and
7 Koz covering the period January to April 2023 between
US$1,725–1,756 /oz. The hedge contracts are largely
aligned with final Singida construction costs. No additional
hedges will be added.
Sustainability
In 2022, the Group published its inaugural stand-alone
Sustainability Report which saw Shanta report on key
sustainability issues that are most material to Shanta’s
stakeholders. This year saw the Company developing
its ESG reporting function and metrics to be more in
line with ESG and Sustainability Reporting Standards.
The 2022 Sustainability Report will be published in April
2023 and will be Shanta’s second Sustainability Report
reflecting our commitment to robust environmental, social
and governance (“ESG”) reporting and operating as a
responsible miner. It also provides insight into the priorities
and key projects that shaped the year and presents our
2022 performance.
Community investment
Shanta considers shared success as a foundation of its
business model, acknowledging that its commercial
achievements stem from productive collaborations with the
communities where its operations are based. The Company
endeavours to establish mutually beneficial relationships
by generating employment opportunities, investing in local
economies, and fulfilling its tax obligations. Through active
participation and cooperation with local communities and
government agencies, Shanta is working to improve living
standards and create opportunities for those communities
in which it operates.
Shanta is one of the largest gold mining contributors
in terms of taxes paid in Tanzania. We provide a
comprehensive disclosure of our tax and overall economic
contributions in our Annual Report, which includes details
of our payments to the government.
Shanta has a robust Corporate Social Responsibility (CSR)
program that has been designed based on community
initiatives developed in collaboration with significant
community and regional stakeholders. Shanta’s community
investment projects focus on Water, Education, Livelihood,
and Health initiatives, which are the primary pillars of
the program. These initiatives aim to benefit the local
communities in the vicinity of Shanta’s New Luika, Singida,
and West Kenya operations.
Annual Report and Financial Statements 2022
CHIEF EXECUTIVE OFFICER’S REVIEW
Some of the projects the Group carried out in 2022 are
mentioned below:
Education
Shanta firmly believes in providing quality education as
a means of promoting lifelong learning and sustainable
development in local communities. Over the years, the
company has undertaken various education projects such
as infrastructure development, sponsoring underprivileged
students, and expanding access to Information and
Communications Technology “ICT”.
In 2022, Shanta continued to prioritise education with a
focus on the Songwe region, West Kenya, and Singida. The
company sponsored 77 secondary school and 231 primary
school students from underprivileged families, providing
them with uniforms, shoes, and stationery.
Shanta constructed new infrastructure, including a
two-unit teacher’s house in Miembeni Primary School,
four classrooms and two teachers’ offices in Mbangala
Secondary School, and four classrooms with toilets
in Mlumbi and No 7 schools. Additionally, the entire
administration block at Bushiangala Primary School in West
Kenya was renovated.
Shanta also worked towards improving access to ICT
equipment and learning, completing the construction of a
computer lab at Saza Secondary School and partnering with
Vodacom Tanzania to install a communication tower and
distribute 50 tablets with education materials.
Water
Access to water is a major challenge for many residents
in the Songwe region of Tanzania due to limited water
infrastructure and unpredictable rainfall. Shanta has
a history of supporting initiatives to improve water
infrastructure, including drilling boreholes, constructing
pumps for existing wells, and building storage facilities in
local villages.
In 2021, Shanta invested in a pipeline connecting the Luika
River Dam to Mbangala village, spanning 4 km, with the
objective of providing reliable and clean running water
to around 7,600 people. In 2022, Shanta extended this
pipeline and installed additional water stations near the
Mbangala Primary School, Mbangala Medical Centre, and
the furthest dwellings.
In the West Kenya license area, Shanta implemented a
water harvesting initiative in two affected schools, Nyangulu
Mixed Secondary School and Marende Primary School,
around the Ramula prospect area. The initiative involved
installing rainwater harvesting infrastructure, including
guttering and water storage tanks. Shanta also involved the
community in the project, encouraging them to provide
locally available materials and casual labour. The initiative
has benefited both schools and neighbouring households,
providing clean water to a population of approximately
1,500 people.
Livelihood
Farming and artisanal mining are key income generating
activities in Songwe, Singida and near our work in West
Kenya. Shanta has supported a range of livelihood
programmes to support and grow the economic prospects
of our local communities.
We continue to support local farmers in Songwe though
our Mining Agriculture Improvement Program (“SMAP”) as
well as our Saza Village Beekeepers group. The number of
farmers engaged with our agricultural schemes has grown
exponentially since inception in 2017. In 2022 Shanta
sponsored 8 Farmers representatives and 2 Beekeepers
representatives to the National Farmers exhibition which
takes place annually. These representatives managed to
showcase their products as well as having the opportunity
to learn from other farmers and supplier attending the
exhibition.
In 2022 Shanta continued to support members of its
programme by providing training and donating planters,
seeds, and fertiliser. In addition, the harvest which was the
result of several years’ work with the community yielded
1,600,000 kg and 1,350,000 kg of Sunflower. Sesame
harvest resulted in a total US$1.9 million of income and
Sunflower harvests resulted in US$580k of income. This
meant that US$2.5 million was distributed directly to the
farmers as direct income to support their family needs. For
the 2023 season Shanta has added further investment in
the programme to continue to benefit the region.
Health
Access to quality healthcare services and the prevalence
of long-term health issues remain ongoing challenges
in Kenya and Tanzania. In 2022, Shanta was pleased to
continue its partnership with PharmAccess Foundation and
AMREF to support the Innovative Partnership for Universal
Sustainable Healthcare (i-PUSH) project in West Kenya.
This project aims to connect at least half a million Kenyans
to the National Hospital Insurance Fund (NHIF), which
provides medical insurance cover to its members.
Despite the importance of health cover, many families in
our project areas are not enrolled in the NHIF scheme due
to financial constraints and a perception that it is not an
essential need. To address this issue, the program targets
women of childbearing age, and once enrolled in i-PUSH,
they receive subsidised health cover for a year. To support
this initiative, we made a financial contribution by donating
50% of the first year’s annual premium for 500 low-income
women in our project area, triggering the remaining 50%
contribution from i-PUSH. As a result, enrolled women and
their families now have access to NHIF cover for a year.
14
CHIEF EXECUTIVE OFFICER’S REVIEW
15
Furthermore, we fully renovated the Mang’onyi Dispensary
in the Mang’ony village close to Singida and are close to
completing the construction of the maternity ward, which is
scheduled for completion in H1 2023.
Mitigating environmental impact
Climate change
Over the past decade, the issue of climate change and
how the mining industry can respond to it has become
increasingly pressing. As a responsible gold miner, Shanta
is committed to scrutinising its practices and mitigating
its impacts. While our operations require a stable and
reliable power supply, we recognise that our energy
use and efficiency should incorporate efforts to reduce
our direct and indirect emissions. We understand the
importance of prioritising carbon removals and emissions
reductions, and despite our size, we aim to play our part
in the global energy transition. Our stakeholders have
also identified energy use and efficiency as a priority, and
we are determined to reduce our energy consumption
without compromising on operational performance or cost
control. We have already taken steps to improve our energy
consumption practices, but we are eager to learn from the
best practices in the industry and implement robust policies
and measures.
Biodiversity
At New Luika, Shanta Gold is committed to reducing its
impact on the surrounding flora and fauna and protecting
biodiversity. The company conducts fauna surveys
before working in undisturbed areas, communicates and
enforces strict rules for the protection of wildlife, and has
clear guidelines for relocating wildlife encountered by
employees. Shanta Gold also reports incidents resulting
in harm to wildlife or damage to vegetation, monitors
flora and fauna biodiversity annually, and tests progressive
mineral leaching through water analysis. The mining
activities at New Luika have disturbed less than 1% of the
Patamela Forest Reserve, and Shanta will rehabilitate the
disturbed areas.
Outlook
At New Luika, annual production guidance has been
set to approximately 66,000 – 72,000 oz at an AISC of
US$1,200 – 1,300 /oz. Production guidance for the Singida
Gold Mine will be released following the commencement
of commercial production, however the current LoM plan
guides for approximately 32,000 oz pa.
I want to express my gratitude to our shareholders,
employees, Board members, and partners for their
unwavering dedication and support for the company
during this period. We are thrilled about the upcoming
addition of the Singida mine to our portfolio, the extremely
encouraging West Kenya exploration results and the
ongoing replacement of reserves at New Luika, which all
bode well for the Company’s future prospects in both the
short and long term.
Eric Zurrin
Chief Executive Officer
28 March 2023
Annual Report and Financial Statements 2022
CHIEF EXECUTIVE OFFICER’S REVIEW
16
CHIEF EXECUTIVE OFFICER’S REVIEW
17
Annual Report and Financial Statements 2022
Annual Report and Financial Statements 2022
18
18
19
Directors’ Report
The Directors present their annual
report and the audited financial
statements of the Group for the year
ended 31 December 2022.
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 15. 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$2.9 million (2021 US$1.0 million).
Dividends
The final 2021 dividend of 0.10 pence per ordinary share
was paid on 15 July 2022 and a 2022 interim dividend of
0.10 pence per share was paid on 24 November 2022.
Following the year-end, the Directors have proposed a final
dividend of 0.10 pence per share, subject to the approval
of shareholders on 28 April 2023.
Subsequent events
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)
◼Michelle Jenkins
◼Ketan Patel
◼Keith Marshall
Executive
◼Eric Zurrin
◼Luke Leslie (resigned 28 March 2023)
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 UK
adopted international accounting standards 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 2022
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 December 2024 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 are contained in the Remuneration
Committee Report on pages 31–33 and in note 23 to the
financial statements.
Signed on behalf of the Board of Directors on
28 March 2023.
Eric Zurrin
Chief Executive Officer
Anthony Durrant
Chairman
20
DIRECTORS’ REPORT
21
Annual Report and Financial Statements 2022
22
23
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 maximise value for all our shareholders
whilst ensuring continuity and consistency through
sustainable and responsible mining.
Our 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 continued the construction of Singida
Gold Mine in 2022. The company also continued with
exploration and infill drilling of the West Kenya Project.
These assets supplement the Company’s growth pipeline
and are expected to bring additional economic benefit to
shareholders in the future.
During the year, the three mining licences at Singida Gold
Mine were extended for a further 10 years to 2032, and
a maiden mining licence was awarded at the Porcupine
South Deposit.
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 we
continue 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 the existing mining licences
adjacent to the existing reserves at our Luika, Ilunga,
Elizabeth Hill, and Porcupine South deposits;
◼Within the economic circle of the New Luika Gold
Mine; and,
◼Regionally, utilising prospective exploration ground held
by the Company within the Lupa Goldfield.
The roll-out of 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 calls and at its Annual General
Meeting (“AGM”).
Annual Report and Financial Statements 2022
CORPORATE GOVERNANCE STATEMENT
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.
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, our 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 posted on the Company News page
at www.shantagold.com/news-media/news/. At last year’s
AGM, all resolutions were duly passed.
The CEO, Eric Zurrin has 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 Company Secretary can be contacted by shareholders
on matters of governance, as can Eric Zurrin. 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 arrangements
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 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.
Regular dialogue is held externally with wider stakeholder
group representatives to 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.
The Company also engages with its shareholders through
quarterly calls and at its Annual General Meeting, both
of which provide an effective platform for two-way
communication and feedback.
4. Effective risk management throughout
the organisation
The Board has three Sub-Committees which 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 Remuneration Committee ensures that the company
has a remuneration strategy that attracts and retains the
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 2022, the structure and membership of
Board Committees was as follows:
◼Audit Committee
– Michelle Jenkins (Chairman)
– Anthony Durrant
– Ketan Patel
◼Sustainability Committee1
– Ketan Patel (Chairman)
– Anthony Durrant
– Keith Marshall
◼Remuneration Committee
– Keith Marshall (Chairman)
– Anthony Durrant
– Michelle Jenkins
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 in
the 2022 Annual Report. 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.
1
Responsible for safety, health and environment and corporate social responsibility.
24
CORPORATE GOVERNANCE STATEMENT
25
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. 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.
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
◼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 corporate social
responsibility are continually assessed.
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.
Key examples of such standards and policies include the
‘Anti Modern Slavery Policy’ and ‘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.
As at the end of 2022, the Board comprised 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. Following the resignation
of Luke Leslie on 28 March 2023, the Board will be
comprised of only one Executive Director.
A biography of each of the Directors is included within the
Board of Directors section on this website at http://www.
shantagold.com/corporate/board-of-directors/.
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 below shows the attendance of existing Directors
are board meetings during the year to 31 December 2022.
Each board and committee meeting must meet quorum
requirements.
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.
A biography of each of the Directors is included within the
Board of Directors section on this website, at: http://www.
shantagold.com/corporate/board-of-directors/.
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. 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.
All Directors retire by rotation at regular intervals in
accordance with the Company’s Articles of Association.
Annual Report and Financial Statements 2022
CORPORATE GOVERNANCE STATEMENT
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
The Company continually monitors personal and corporate
performance of all of its employees and directors. A formal
assessment process is conducted annually.
Responsibility for assessing and monitoring the
performance of the executive directors lies with the
Chairman of the Remuneration Committee.
Agreed personal objectives and targets, including financial
and non-financial metrics, are set each year for the
Executive Directors and performance is measured against
these metrics.
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 ensure
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.
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 has instituted various training and
development programs, particularly in health and safety,
in an effort to upgrade the skill level of all employees. The
goal is to have a workforce where each individual takes full
accountability for his/her work colleagues’ safety and the
critical role he/she plays in the success of Shanta Gold.
We believe in taking care of our people who play a critical
role in the success of our business.
We are committed to the safety, health, and welfare of
our employees, contractors, management and visitors
to our worksites in Tanzania and Kenya. We maintain
a zero-tolerance policy in regards to negligence of
health and safety best practices. Education, training and
ongoing communication are key to ensuring an injury-free
workplace and promoting safety. Health and safety is an
integral pillar of our performance and is used to evaluate
the performance of all employees on a monthly basis.
Employees are recognised for their safety awareness and
performance each month to encourage safe practices.
We recognise the impact that our activities have on local
communities in the operational areas of our mining activity.
The Company believes it is critical that the local community
is an integral stakeholder in the long-term sustainability of
Shanta. We are focused on adding business value beyond
the financial contributions made through tax and royalty
payments. Shanta Gold has an objective of training and
employing local residents and thereby yielding direct and
sustainable benefits to the local communities.
Approximately 99% of the Group’s employees are nationals
of our host countries and approximately 40% of these are
permanent residents of the local villages around New Luika
and Singida.
Further details of the Company’s corporate governance
arrangements are provided on this page and in the
Company’s Annual Report.
9. Governance structures and processes that support
good decision-making
Details of the Company’s corporate governance
arrangements are provided on this page. 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.
Director
Board
meeting
Audit
Committee
Remuneration
Committee
Sustainability
Committee
Eric Zurrin
Executive
4
–
–
–
Luke Leslie
Executive
4
–
–
–
Anthony Durrant
Non-Executive
4
3
3
3
Ketan Patel
Non-Executive
4
3
–
3
Michelle Jenkins
Non-Executive
4
3
3
–
Keith Marshall
Non-Executive
4
–
3
3
Number of scheduled meetings in 2022
4
3
3
3
26
CORPORATE GOVERNANCE STATEMENT
27
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 large shareholders
following the release of financial results and regards the
Annual General Meeting (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 and the Company’s brokers. In addition,
analysts’ notes and brokers’ briefings are reviewed to
achieve a wide understanding of investors’ views.
As described above the Board and the Committees meet
regularly and individual attendance has been disclosed
above under Principle 5. Key work carried out over the
past year has included approval of the Annual Report
by the Audit Committee and approval of annual Board
remuneration by the Remuneration Committee. The
Committees expect to report on the key decisions made
and work carried out in the year within the forthcoming
Annual Report.
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 at:
http://www.shantagold.com/news-media/news/. 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.
All officers and staff of Shanta Gold are required to comply
with the Anti-Bribery Policy and, so far as is practicable,
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 will 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
28 March 2023.
Eric Zurrin
Chief Executive Officer
Anthony Durrant
Chairman
Annual Report and Financial Statements 2022
CORPORATE GOVERNANCE STATEMENT
28
CORPORATE GOVERNANCE STATEMENT
29
Annual Report and Financial Statements 2022
30
31
Remuneration Committee Report
Dear Shareholders,
I am delighted to once again provide an update on behalf
of the Remuneration Committee. In 2022, the committee
remained committed to ensuring that rewards are closely
linked to performance and that incentives are optimised.
This enables the Company’s remuneration structure to
create an environment that fosters continuous maximum
returns for shareholders.
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,
3. To encourage accountability in the workplace and link
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 three scheduled times in 2022.
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,
◼Review and approve any termination payment such
that these are appropriate for both the individual and
the Company.
Board effectiveness review
A board Effectiveness Review was undertaken by the
Remuneration Committee in 2022. Internal and external
stakeholders were solicited for feedback relating to
the effectiveness of the Shanta Gold Board. Feedback
confirmed that the Board of Directors is competent and fit
for purpose. Further conclusions included expanding social
diversity and skills that would strengthen the existing board
of directors. A director recruitment process is ongoing to
add new directors in 2023.
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 conduct in
alignment with the best interests of our shareholders. The
performance, criteria and applicable weightings for 2022
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.
Annual Report and Financial Statements 2022
REMUNERATION COMMITTEE REPORT
The following table details notable performance indicators that were set in December 2021 and
considered by the Committee in its assessment of the Group’s performance during 2022.
Performance indicator
Weighting
2022 Rating
Key achievements in 2022
Safety record
20%
Above Target
◼No fatalities across the Group
◼The NLGM TRIFR rate in 2022 was 1.27
◼The Singida TRIFR rate in 2022 was 0.85
◼The industry average TRIFR rate is ~2.9 (IMCC)
◼A record of 9 million hours LTI free were worked leading up to April 2022, spanning 51
months without LTI at NLGM
Operating performance
20%
Below Target
◼65,209 oz of gold was produced at NLGM in 2022, implying a -4% variance to guidance
for 2022 of 68-76 koz
◼The 2022 budgeted production plan included approximately 30% of gold mined from the
BC Crown Pillar, a highly technical operation. The NLGM UG team performed exceptionally
well to recover the planned ounces safely from the crown pillar
◼Mining reconciliation of grade control vs. declared ore mined improved from 2021 at
+9% tonnes, -5% grade, +3% ounces in 2022
Financial position
and profitability
15%
On Target
◼AISC for the year was US$1,271 / oz and was within the AISC cost guidance of US$1,150-
1,275 /oz set for 2022 and a 6.4% decrease on the 2021 AISC
◼Total capex for the group amounted to US$14.4 million at NLGM and less than budgeted
◼Impact of cost inflation was controlled by sound financial practises
Business prospects
30%
Above Target /
Outstanding
◼Mine life extended to Q1 2028 from Q4 2026, a fourth consecutive year of mine life
extension
◼Singida’ s construction remains on track for first production in March 2023, adding a
second revenue stream across the portfolio
◼Total West Kenya resources of 1.76 million ounces (“Moz”), an increase from 1.18 Moz
since Shanta commenced drilling at the start of 2021. Indicated resources of 1.14 Moz, an
increase from NIL since the start of 2021
Business sustainability
15%
Above Target
◼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 2033
◼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
◼Positive engagement with the TRA resulted in US$9.1 million in VAT received as a cash
refund/tax offset in 2022
◼Publication of inaugural 2021 Sustainability Report in 2022, anticipated publication of
the 2022 Report in April 2023
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 the CEO of 64.2% and CFO of 60.7% of their respective eligible amounts.
32
REMUNERATION COMMITTEE REPORT
33
Retention awards
Retention of the Executive Directors is key to the
Company’s long-term strategy. In recognition of this the
Committee approved a retention plan, where a retention
award of GBP £200,000 would be paid to each of the
Executive Directors for remaining with the Company for a
twenty-four month period to the end of December 2022.
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.
Directors’ remuneration
31 December 2022
31 December 2021
(US$000)
Fees/
salary
Performance
bonus
Benefits
in kind
Other
Total
Fees/
salary
Performance
bonus
Benefits
in kind
Other
Total
Fees, salary, bonuses
and related benefits
Eric Zurrin1
435
217
0
–
652
440
372
115
–
927
Anthony Durrant2
150
–
–
–
150
150
–
–
–
150
Luke Leslie1
304
152
0
–
456
372
313
113
–
798
Robin Fryer2
0
–
–
–
0
21
–
–
–
21
Ketan Patel2
95
–
–
–
95
95
–
–
–
95
Keith Marshall2
85
–
–
–
85
85
–
–
–
85
Michelle Jenkins2
85
–
–
–
85
54
–
–
–
54
Sub-total
1,154
369
0
0
1,523
1,217
685
228
–
2,130
Share based payments
Eric Zurrin1
–
217
–
–
217
–
0
–
–
0
Luke Leslie1
–
152
–
–
152
–
0
–
–
0
Sub-total
0
369
0
0
369
0
0
0
0
0
Base remuneration to
Directors
1,154
738
0
0
1,892
1,217
685
228
-
2,130
Retention award
Eric Zurrin 1
–
–
–
247
247
–
–
–
–
–
Luke Leslie 1
–
–
–
247
247
–
–
–
–
–
Sub-total
–
–
–
494
494
–
–
–
–
–
Total remuneration to
Directors
1,154
738
0
494
2,386
1,217
685
228
–
2,130
1 Executive
2 Non-executive
The Committee continue to evaluate and discuss the
adoption of a Long Term Incentive Plan (LTIP) that could be
used to retain and motivate senior executives. An LTIP may
be forthcoming at a future date.
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
Annual Report and Financial Statements 2022
REMUNERATION COMMITTEE REPORT
34
REMUNERATION COMMITTEE REPORT
35
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.
Shanta Gold Limited Board
CEO
Audit Committee
Sustainability Committee
Executive Committee Reports
>20 meetings in 2022
Monthly Report of Operations
and Sustainability
12 reports in 2022
Heads of Departments (HODs)
Formal engagement with CEO
Full-day workshops
Budget, Operational and
Strategy Setting
Annual three-day meeting with all
HODs and expanded to include
senior managers
Enterprise Risk Assessment
1. Political and Social License
to Operate
2. Resource Protection
3. Integrity of resource model
4. Illegal Mining/Theft/Terrorism
5. Taxation Regime
6. Operational
7. Environmental/Safety
8. Cashflow/Profitability
9. Employees
10. Cyber
ESG Team
Occupational Health & Safety
Community
Environment
Climate
Sustainability Reporting
Business Ethics
The below outlines the risk reporting structure in place
and summarises the nature of information presented to
the Board:
Annual Report and Financial Statements 2022
RISK REPORT
Principal risks and uncertainties
Risk
Background
Risk mitigation
Key performance
indicator (Page 32)
1. Political and
social license to
operate
Evaluating Shanta’s
contribution to society
and economy in host
countries
◼CSR Manager in place to lead the CSR initiatives
◼An amount budgeted each year to fund CSR programmes, in line with community expectations.
◼Company contribution to the economy highlighted in all interactions with Government officials
◼Extensive local employment in Tanzania and Kenya
◼Recognition of industry leading Local Content strategy
◼All CSR projects being handed over to recipients with press present to sensitise public on Shanta’s
initiatives
Business Sustainability
2. Resource
Protection
Risk of losing mining
title at New Luika
Mine, Singida, or West
Kenya Project
◼Regular dialogue maintained with mining licensing authorities in Kenya and Tanzania
◼New Luika Mine: 10 year mining licences are in place. Singida: 10 year mining licence renewed
in 2022. Risk considered low.
◼Granting of 10 year mining licence of Porcupine South deposit
◼Investment in drilling activities and mine life extension
◼Continued investment at the Singida Project to fund construction
◼Investment in the West Kenya Project feasibility workstream and resource upgrade
Business Sustainability
3.
Integrity of
resource model
Variability of ore
tonnes and grades due
to changes in geology
◼Ongoing increased grade control drilling in 2022 to improve the mine planning confidence
◼Reserve grade reconciliation within tolerance threshold in 2022
Operating Performance
Business Sustainability
4. Illegal Mining/
Theft/Terrorism
Risk of loss or theft of
mineral, loss of access
to areas of license, risk
of crime and violence,
reputational risk
◼Community programmes to support alternative livelihoods
◼Externalised professional security forces at NLGM, Singida and West Kenya Project
◼Security management presence
◼Security infrastructure at all offices
◼Increased use of external technologies to monitor physical movements
Operating Performance
Business Sustainability
5. Taxation Regime Risk of change in
Economic Regime
impacting Shanta’s
business
◼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 relevant government
authorities
Profitability
Financial Position
6. Operational
Risk of internal and
external factors
negatively impacting
operations and
production
◼Uninterrupted access to water, with use of dis-used open pits for water storage
◼Ore stockpile levels are managed providing sufficient coverage
◼Alternative power sources
◼Acquisition of solar plant at NLGM
◼Increased flexibility in underground mining access through replacement of ageing fleet
Operating Performance
Profitability
7. Environmental/
Safety
Risk of major
environmental
incident or
catastrophic impact to
communities
◼Review and audit of safety management systems are regularly conducted 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
Safety Record
Operating Performance
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 monthly budget
◼Annual budgets are set during a robust 3-day workshop to target operational and financial
efficiencies
◼Capital expenditure planning including affordability for exploration drilling is reviewed at least
monthly
◼Working capital limits maintained
◼Diversified banking relationships across multiple jurisdictions
◼Senior debt facility and Working Capital facility agreed with Stanbic Bank Tanzania in 2022
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 in recruitment of skilled
positions that are available in the country
◼Limited use of expatriates with succession plans in place
◼Company has a local skills development programme focussed on the villages surrounding NLGM
and Singida
◼Retention mechanisms used to ensure long-term employee commitment
Business Prospects
Business Sustainability
10. Cyber
Risk of external
technological
interference of systems
and controls
◼Enhanced malware software
◼Double authentications procedures implemented across financial approval processes
◼Enhanced financial controls
Financial Position
Business Sustainability
36
RISK REPORT
37
Sustainability Committee Report
Dear Shareholders,
On behalf of the Board, it is my pleasure to introduce
Shanta’s 2022 Sustainability Committee Report. We
continued our commitment to creating long-term
sustainable value for all stakeholders through leading
sustainability and ESG approaches in 2022.
The role of our Sustainability Committee
Our Board is responsible for leading our business strategy,
which places sustainability at its core. To achieve this goal,
we have established a Sustainability Committee, which I
chair alongside two other Directors, Anthony Durrant and
Keith Marshall. The Committee meets at least three times a
year and is responsible for setting the sustainability strategy
for the entire Group.
Throughout the year 2022, the Committee convened
three times to assess reports relating to health and safety,
environmental, and social concerns within the Group.
Our aim is to support the Board in identifying the most
material sustainability issues for our stakeholders, and
to monitor the Group’s progress in addressing them.
To ensure comprehensive coverage of these issues, the
Committee thoroughly reviews and approves the annual
Sustainability Report.
Stakeholder engagement
The Company considers engaging with all stakeholders
crucial to its long-term success. Stakeholders include
shareholders, employees, suppliers, customers, regulators,
industry bodies, government bodies, local community
groups, and creditors.
The Company seeks feedback through regular meetings,
conversations, and conferences with stakeholders. These
meetings enable bilateral discussions on topics relevant
to stakeholders and ensure the Company’s operations are
compliant with local laws and directed towards the needs
of local communities.
The company also engages with institutional and private
shareholders through quarterly calls, the AGM, and
individual meetings with the CEO. Retail shareholders
are engaged through the Investor Meet Company
platform. The Company values shareholder opinions and
incorporates them into ongoing strategic decision-making.
During 2021 Shanta conducted a materiality assessment
with internal and external stakeholders, the results of which
were published in the 2021 Annual Sustainability report,
with the goal to help us better understand and prioritise
the ESG risks and opportunities that are most material
to the Company, its stakeholders, and wider society. This
materiality assessment continued to drive our business
focus for 2022.
Climate change disclosure
Although we are benchmarking competitively against
our peers for GHG intensity per ounce of gold sold, we
acknowledge the need to take additional measures to
reduce our carbon footprint and align ourselves with the
targets of the Paris Agreement. In the future, we will report
in line with TCFD and measure and disclose our Scope 3
emissions to expand our understanding of our full GHG
footprint. However, we expect that our Scope 3 emissions
will likely form a small proportion of our overall footprint
compared to other metals that require greater refining.
Additionally, we plan to develop an emissions target based
on climate science to demonstrate our objectives and
aspirations towards achieving a net-zero global economy.
During 2022, we are proud to report that we acquired
the solar plant at New Luika in a financially advantageous
transaction and now fully own and operate this facility.
We estimate the remaining useful life to be around 10–15
years, of which this asset can be relocated between our
mining projects over this period as required.
Annual Report and Financial Statements 2022
SUSTAINABILITY COMMITTEE REPORT
Peer group comparison: tCO2e / oz Au sold
0.12
0.37
0.54
0.83
0.9
1.17
2.56
0.71
Lundin Gold
West African
Resources
Endeavour Gold
Shanta Gold
Resolute
Galiano Gold
Centamin
Pan African
Resources
Managing resources and environmental impacts
Although mining is a resource-intensive process, we are
committed to minimising our environmental impact. We
monitor our water usage and tailings facilities and have
introduced solar power to meet some of our energy
needs. Our focus on protecting natural resources and
avoiding unnecessary harm is reflected in our efforts to be
transparent and accountable about our approach.
We have implemented a range of measures to reduce the
environmental impacts of our operations. These include
best-in-class Tailings Storage Facilities, community-focused
water stewardship programs, and a shift towards lower-
carbon power sources.
In Tanzania, we submit an Annual Environmental Monitoring
Report to the National Environmental Management Council
in Dar Es Salaam in compliance with the Tanzanian Mining
Act 2010 and our Mining Licences. The report contains
accurate records of our monitoring activities, instances
where environmental limits have been exceeded, remedial
actions taken, and details of emissions, discharges, and
wastes.
In Kenya, we comply with the Constitution of Kenya 2010
and the Environmental Management and Coordination
Act (EMCA) 1999 (Amendment 2015). We also have an
Environmental Rehabilitation and Restoration Plan that
outlines the process for rehabilitating and restoring sites
where exploration activities have been carried out.
Group performance for the year
Core priority
Metric
2022
2021
Year on year
Change (%)
Our people
Total recordable injury frequency rate (“TRIFR”)
1.13
0.75
+0.38
+51%
Long term injury frequency rate
–
–
–
–
Group female employees
10%
9%
+1
+11%
Board female representation
17%
17%
–
–
Managing our
environment
Waste recycled (%)
90%
92%
(2)%
(2)%
Carbon emission intensity (tCO2-e / oz Au sold)
0.71
0.73
(0.02)
(3)%
Creating opportunities for
our communities
Social project expenditure (US$ million)
0.3
0.4
0.1
(25)%
Taxes, royalties and levies paid in Tanzania + Kenya
(US$ million)
26.8
27.5
(0.7)
(2.6)%
Being a responsible
accountable business
Release of the 2022 Sustainability Report to enhance ESG reporting in April 2023
Alignment with 6 UN Sustainable Development Goals
At New Luika, Singida and West Kenya, health and safety metrics represented 20% of the 2022 performance bonus pay-out
and comprise TRIFR and LTI rates
38
SUSTAINABILITY COMMITTEE REPORT
39
Working with Local Business
Shanta recognises its responsibility to promote social and
economic development around its mining operations.
To achieve this goal, the company has committed to
procuring products locally whenever possible, in line with
its Procurement Policy, which emphasises dealing with
businesses near the operations and considers locality as an
important factor in the decision-making process.
Through this approach, Shanta not only streamlines its
logistics but also supports the local economy, creates
employment, and provides a market for small and medium
enterprises (SMEs), contractors, and suppliers in the region.
In 2022, the Company spent a total of US$117 million in
Tanzania and Kenya, out of which 80% (US$94 million)
was procured in-country, demonstrating its commitment
to prioritising national and regional suppliers. Shanta’s
Procurement Policy not only formalises the Company’s
approach to local business but also outlines the
expectations of its employees regarding ethical behaviour
and conduct.
The year ahead
The Shanta Board and senior management understand
that sustainability is a continuous journey, and they
are committed to integrating ESG and sustainability
considerations into their decision-making process.
They plan to establish measurable sustainability targets
and track their progress towards achieving them using
industry-standard frameworks. Their aim is to become a
responsible leader in the mining industry and contribute to
a sustainable future.
In addition, we are committed to setting measurable
sustainability targets and regularly tracking our progress
towards achieving them. We will leverage industry-leading
frameworks and standards to ensure that our sustainability
targets are ambitious, achievable, and aligned with global
sustainability goals. Through this approach, we aim to
establish ourselves as a responsible leader in the mining
industry and contribute to a sustainable future for all.
The Board thanks the Shanta team and stakeholders for
their support in advancing their sustainability agenda and is
looking forward to the ESG future of Shanta Gold.
Ketan Patel
Chair of the Sustainability Committee
Annual Report and Financial Statements 2022
SUSTAINABILITY COMMITTEE REPORT
SUSTAINABILITY COMMITTEE REPORT
40
41
Annual Report and Financial Statements 2022
42
43
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.
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 three times in 2022.
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 took initiative to
enhance internal controls and risk mitigation measures. 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.
The carrying value of mining assets
The Committee reviewed the assessment made by
management that the carrying value of the Group’s mining
assets are equal to their recoverable value in accordance
with the requirements of the relevant accounting standard.
The Committee has found that the key judgements
made by Management in assessing the carrying value of
the Group’s mining assets to be reasonable and that no
impairment is required as at year end.
Annual Report and Financial Statements 2022
AUDIT COMMITTEE REPORT
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. The Board is also satisfied with the independence
of the auditors. 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’s priority is to uphold the internal control
framework at Shanta and to oversee the management of
financial risks. We will take necessary measures to mitigate
risks as they arise. Additionally, we will maintain open
communication with the Company’s external auditors to
bring attention to any emerging financial risks or concerns
that may arise in the future. Our goal is to ensure that the
Company’s financial reporting processes are thoroughly
scrutinised and challenged.
Michelle Jenkins
Chair of the Audit Committee
44
AUDIT COMMITTEE REPORT
45
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 2022 and of the Group’s loss
for the year then ended;
◼Have been properly prepared in accordance with UK
adopted international accounting standards; and
◼Have been prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.
We have audited the financial statements of Shanta Gold
Limited (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 December 2022 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 their preparation 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 the 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:
◼Obtaining and critically reviewing the Directors’ base
case cashflow forecast for the period to December
2024 and evaluating the key underlying assumptions,
including gold price, production, operating costs
and capital expenditure. In doing so, we considered
empirical data, historical performance and trading to
date. Specifically, we confirmed that the forecast period
excluded receipts associated with VAT receivables due
to the uncertainty of the timing, other than those that
have already been approved by the Tanzanian Revenue
Authority.
◼Performing a review and recalculation of forecast
covenants.
◼Performing an accuracy check on the mechanics of the
cash flow forecast model prepared by management and
approved by the Directors.
◼Obtaining and reviewing the stress test scenarios in
respect of scenarios including gold pricing, production
and operational costs and confirming that liquidity and
covenants are maintained under such scenarios.
◼Assessing the adequacy of the stress test scenarios
and considering whether any other scenarios should
be tested.
◼Considering the adequacy of the going concern
disclosures in Note 2.2 based on our audit work
performed as detailed above.
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.
Annual Report and Financial Statements 2022
Overview
Coverage
96% (2021: 81%) of Group profit before tax
100% (2021: 100%) of Group revenue
99% (2021: 95%) of Group total assets
2022
2021
Key audit
matters
Recoverability of VAT
Yes
Yes
Carrying value of mining assets
Yes
Yes
Materiality
Group financial statements as a whole
US$1.4 million (2021:US$1.0 million) based on 1.2% of
revenue (2021: 5% of 2-year average 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.
While Shanta Gold Limited is a AIM listed company, the
Group’s operating and development mines are located
in Tanzania. We assessed there to be one significant
component, being the main operational entity of the Group
located in Tanzania. A full scope audit for Group reporting
purposes was performed on-site for the Tanzanian reporting
component by the BDO member firm in Tanzania. A BDO
member firm in Kenya also performed specified audit
procedures on the Kenya non-significant components
for Group reporting purposes. The Group engagement
team performed the audit of the consolidation. The
remaining non-significant operating, corporate and holding
companies were principally subject to specific substantive
procedures on significant risk areas and analytical review
procedures.
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 below),
and set out the information to be reported to the Group
audit team.
◼The Group audit team performed procedures
independently over key audit risk areas, as considered
necessary, including the key audit matters below.
◼The Group audit team was actively involved in the
direction of the audits performed by the component
auditors for Group reporting purposes, along with
the consideration of findings and determination of
conclusions drawn.
◼The Statutory Auditor or their representative in the
Group audit team visited the mine sites in Tanzania,
attended virtual clearance meetings for the significant
component and spent significant periods of time
with the component auditor responsible for the
significant component during their fieldwork and
completion phases.
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.
46
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHANTA GOLD LIMITED
47
Key audit matter
How the scope of our audit addressed the key audit matter
Recoverability of VAT
(see notes 3 and 17)
We considered and challenged Management’s assessment of the carrying value, timing of recovery and
presentation of the receivables.
Our specific audit procedures in this regard included:
◼We considered and critically challenged Management’s assessment of the recovery of the VAT. In particular, this
included consideration of the current regulatory environment, the nature of correspondence with the relevant
tax authorities, publicly available information and inquiries made with Management.
◼We discussed and critically assessed Management’s own assessment that the Group can legally recover the
VAT with the Group’s independent external Tanzanian legal adviser. We have obtained written confirmation
from the Group’s Tanzanian legal adviser which supports the Board’s assessment that the VAT is legally valid
and remains recoverable. In addition, we considered the nature of the gold smelting and refining process in
assessing whether Management’s judgement that the VAT is recoverable under the legislation is acceptable.
In relying upon the assessments made by such expert, we evaluated the independence, competence and
objectivity of the professional adviser relied upon by Management. We reviewed correspondence between the
Group and the tax authorities and made inquiries of Management and local tax experts regarding the nature of
the ongoing discussions with the tax authorities to evaluate the reasonableness of Management’s judgement
in respect of the recoverability of VAT.
◼We considered and challenged Management’s assessment of the provision for discounting including the
estimates regarding the timing of recovery and risk adjusted discount rate applied in the calculation and
performed sensitivity analysis to consider alternative scenarios. In particular, this included consideration of the
payment history, apparent fiscal constraints on the tax authorities and political developments, the nature of
ongoing correspondence and other ongoing legislative changes.
◼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.
The Group has significant VAT
receivables of US$29.3 million as at
31 December 2022, of which US$7.2
million is recognised as a current
receivable and US$22.1 million is
classified as non-current, with US$20.4
being in relation to the disputed VAT in
Tanzania from 2017-2020.
As disclosed in note 17, judgement
is required in determining the
recoverability of the non-current VAT
receivable. This required consideration
of discussions with relevant authorities
in Tanzania and the wider operating
environment, the validity of the VAT
under relevant legislation for the
period 2017-2020 and the ultimate
timing of recovery of eligible VAT.
Given these circumstances, the
recoverability and presentation of VAT
was considered to represent a key risk
for our audit.
Key observations
Based on the procedures performed, we found the judgements made by Management in their assessment of the 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, 3 and 12)
We checked that the impairment models utilised the approved life of mine (‘LOM’) plans and were
subject to appropriate internal review and approval.
We have assessed the appropriateness, in line with IAS 36 Impairment of Assets, of Management’s
identification of the Group’s CGUs, being New Luika Gold Mine and Singida Gold Mine.
We obtained and reviewed Management’s impairment indicator review and we undertook the following
work on management’s impairment indicator review:
◼We evaluated Management’s impairment models against approved LOM plans and our
understanding of the operations, and critically challenged the key estimates and assumptions used
by Management for each of the mining operations by comparisons to current year actuals and
through meetings with operational management, as detailed below. In addition, we verified the
integrity of formulae and the mathematical accuracy of Management’s valuation models.
◼We compared the trading performance against budget/plan for FY 2022 in order to evaluate the
quality of management’s forecasting and where under performance against budget/plan was
highlighted evaluated the impact on the forecasts.
◼In respect of pricing assumptions, our testing included evaluation of management’s gold price
forecasts against analyst consensus forecasts.
◼We involved our internal valuation specialists to assess the reasonableness of the discount rate
applied in the impairment model for both CGUs.
◼We held meetings with mine management (mine managers, geologists, mining engineers) to
understand and challenge the production, operating cost and capex forecasts.
◼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 inspected public information and board minutes to check there was no evidence to suggest the
carrying value of the assets are impaired.
◼We reviewed the disclosures in the financial statements to check that they were prepared in
accordance with the requirements of the accounting standards.
As detailed in Notes 2, 3 and 12, the Group’s mining
assets represent its most significant asset and total
US$115.7 million at 31 December 2022.
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.
As detailed in note 3, there are judgements and
inherent uncertainties involved in assessing the
mining assets for indicators of impairment.
Management have performed an impairment
indicator review under applicable accounting
standards and have not identified any indicators of
potential impairment.
We determined the carrying value of mining assets
to be a key audit matter given the significant
judgements required in respect of the assessment of
indicators of impairment
Key observations
We found the key judgements made by Management and the Board in assessing the carrying value of the Group’s mining assets to be reasonable.
We found the disclosures in the consolidated financial statements to be in line with the accounting standards.
Annual Report and Financial Statements 2022
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.
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 December 2022
31 December 2021
Materiality
US$1.4 million
US$1.0 million
Basis for
determining
materiality
1.2% of revenue
5% of the 2-year average
profit before tax
Rationale for
the benchmark
applied
Materiality has been set using
a benchmark of revenue.
This represents a change
in benchmark basis from
the previous year where an
average 2 year profit before
tax was used to normalise
profit given the impact
seen by Covid-19 and the
current state of the Group’s
operations.
Given the instability of the
Groups profit before tax
as a result of the ongoing
development of Singida,
revenue is deemed the most
appropriate benchmark for
the current financials year.
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 Group’s
scale of operations in
the year.
Performance
materiality
US$1.0 million
US$0.75 million
Basis for
determining
performance
materiality
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 the significant 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$1.1 million (2021: US$0.9 million).
In the audit of the components, we further applied
performance materiality levels of 75% (2021: 75%) of
the component materiality to our testing to ensure that
the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would
report to them all individual audit differences in excess of
US$24,000 (2021:US$20,000). We also agreed to report
differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
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.
48
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHANTA GOLD LIMITED
49
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 Group’s and the Parent
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 Group or the
Parent Company or to cease operations, or have no realistic
alternative but to do so.
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. We considered the
significant laws and regulations to be the Companies
(Guernsey) Law, 2008, tax and legislation and the various
Mining Regulations in Tanzania and Kenya.
◼Based on our understanding we designed our audit
procedures to identify non-compliance with such laws
and regulations impacting the Group. Our procedures
involved making enquiries of Management and those
charged with governance to understand their awareness
of any non-compliance of laws or regulations, inquiring
about the policies that have been established to prevent
non-compliance of laws or regulations by officers and
employees of the Group, inquiring about the Group’s
methods of enforcing and monitoring compliance with
such policies and reviewing board minutes to identify
any instances of non-compliance.
◼We assessed the susceptibility of the Group’s financial
statements to material misstatement, including how
fraud might occur by obtaining an understanding of
the controls that the Group has established to address
risks identified by the entity, or that otherwise seek
to prevent, deter or detect fraud. We considered the
significant fraud risk areas to be in relation to revenue
recognition and Management override of controls.
◼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 from Contracts with Customers
revenue recognition criteria;
b) We tested a sample of sales in the year to supporting
documentation and verified that revenue had been
recognised in the appropriate period by selecting a
sample and testing the invoices raised in December
2022 and January 2023 to check that the related
revenue had been posted to the correct period;
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 to supporting
documentation, including verification of journals
to supporting documentation which we consider
exhibit higher fraud risk characteristics based on our
understanding of the Group and evaluated whether
there was evidence of bias in Management’s estimates
(Refer also to the key audit matters’ section);
◼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.
Annual Report and Financial Statements 2022
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHANTA GOLD LIMITED
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.
Jill MacRae
For and on behalf of BDO LLP, Chartered Accountants
London, United Kingdom
28 March 2023
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHANTA GOLD LIMITED
50
51
Annual Report and Financial Statements 2022
52
53
Consolidated statement of
comprehensive income
(US$000)
Notes
31 Dec 2022
31 Dec 2021
Revenue
4
114,055
103,571
Fair value movement on non-hedge derivatives and other commodity contracts
5
(81)
–
Depreciation
(16,725)
(16,533)
Other cost of sales
(71,844)
(61,078)
Cost of sales
(88,569)
(77,611)
Gross profit
25,405
25,960
Administration expenses
(12,000)
(10,160)
Exploration and evaluation costs
(7,370)
(11,133)
Operating profit
6,035
4,667
Finance income
6
425
3,012
Finance expense
7
(3,535)
(6,679)
Profit before taxation
2,925
1,000
Taxation
9
(5,224)
(7,168)
Loss for the year attributable to the equity holders of the
parent Company
(2,299)
(6,168)
Loss profit after taxation
(2,299)
(6,168)
Total comprehensive expense attributable to the equity holders
of the parent Company
(2,299)
(6,168)
Loss earnings per share attributable to the equity holders of the
parent Company
Basic and diluted loss per share (US$ cents)
10
(0.220)
(0.589)
The accompanying notes on pages 59 to 82 form an integral part of these financial statements.
The items in the above statement are derived from continuing operations.
Annual Report and Financial Statements 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Consolidated statement of
financial position
(US$000)
Notes
31 Dec 2022
31 Dec 2021
ASSETS
Non-current assets
Intangible assets
11
43,343
43,343
Property, plant and equipment
12
115,731
89,656
Right of use assets
13
2,740
2,313
Other receivables
17
22,064
22,698
Total non-current assets
183,878
158,010
Current assets
Inventories
16
36,207
27,234
Trade and other receivables
17
10,495
7,046
Cash and cash equivalents
3,828
13,214
Total current assets
50,530
47,494
TOTAL ASSETS
234,408
205,504
CAPITAL AND RESERVES
Equity
Share capital and premium
23
211,540
211,540
Share option reserve
24
–
148
Translation reserve
450
450
Shares to be issued
–
–
Retained deficit
(60,023)
(55,356)
TOTAL EQUITY
151,967
156,782
LIABILITIES
Non-current liabilities
Loans and other borrowings
19
19,316
3,454
Provision for decommissioning
21
12,266
7,500
Provision for deferred taxation
9
11,180
12,381
Total non-current liabilities
42,762
23,335
Current liabilities
Trade and other payables
18
26,208
17,169
Loans and other borrowings
19
8,126
2,823
Derivative financial liability
81
–
Income tax payable
5,264
5,395
Total current liabilities
39,679
25,387
TOTAL LIABILITIES
82,441
48,722
TOTAL EQUITY AND LIABILITIES
234,408
205,504
The accompanying notes on pages 59 to 82 form an integral part of these financial statements.
The financial statements were approved and authorised for issue by the board of Directors on 28 March 2023 and signed
on its behalf by:
Eric Zurrin
Anthony Durrant
Chief Executive Officer
Chairman
54
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
55
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 1 January 2021
149
210,344
338
5,374
450
1,043
(51,776)
165,922
Profit and total comprehensive income
for the year
–
–
–
–
–
–
(6,168)
(6,168)
Total comprehensive income for
the year
–
–
–
–
–
–
(6,168)
(6,168)
Share based payments
1
1,012
–
–
–
(1,043)
30
–
Lapsed options
–
–
(156)
–
–
–
156
–
Exercised options
–
34
(34)
–
–
–
–
–
Repayment of convertible loan notes
–
–
–
(5,374)
–
–
5,374
–
Dividend payments (note 30)
–
–
–
–
–
–
(2,972)
(2,972)
Total equity 31 December 2021
150
211,390
148
–
450
–
(55,356)
156,782
Loss and total comprehensive expense
for the year
–
–
–
–
–
–
(2,299)
(2,299)
Total comprehensive expense
for the year
–
–
–
–
–
–
(2,299)
(2,299)
Share based payments
–
–
–
–
–
–
–
–
Lapsed options
–
–
(148)
–
–
–
148
–
Exercised options
–
–
–
–
–
–
–
–
Repayment of convertible loan notes
–
–
–
–
–
–
–
–
Dividend payments (note 30)
–
–
–
–
–
–
(2,516)
(2,516)
Total equity 31 December 2022
150
211,390
–
–
450
–
(60,023)
151,967
The accompanying notes on pages 59 to 82 form an integral part of these financial statements.
The nature and purpose of each reserve within Shareholders’ equity is described as follows:
Reserve
Description and purpose
Share capital
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
Annual Report and Financial Statements 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated statement of
cash flows
(US$000)
Notes
31 Dec 2022
31 Dec 2021
Net cash flows generated from operating activities
24
11,753
12,586
Investing activities
Purchase of plant and equipment
(42)
(206)
Purchase of right of use assets
–
(14)
Purchase of assets under construction
(29,529)
(18,002)
Mine development expenditure
(8,387)
(8,494)
Net cash flows used in investing activities
(37,958)
(26,716)
Financing activities
Loans repaid
(6,003)
(2,655)
Principal paid on lease liabilities
(1,301)
(1,134)
Interest paid
(1,361)
(816)
Purchase of silver to fulfil Silver Stream obligation
–
(354)
Buy-back of convertible loan notes
20
–
(9,807)
Equity dividend paid
30
(2,516)
(2,972)
Loans received (net of loan arrangement fees)
19
28,000
1,000
Movement in restricted cash
–
2,500
Net cash flows received from / (used in) financing activities
16,819
(14,238)
Net decrease increase in cash and cash equivalents
(9,386)
(28,368)
Cash and cash equivalents at beginning of year
13,214
41,582
Cash and cash equivalents at end of year
3,828
13,214
The accompanying notes on pages 59 to 82 form an integral part of these financial statements.
56
CONSOLIDATED STATEMENT OF CASH FLOWS
57
Annual Report and Financial Statements 2022
58
59
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 28 March 2023 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.
2.1
Basis of preparation
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 UK adopted international accounting standards.
The preparation of financial statements in compliance with
UK adopted international accounting standards, 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
The Directors have performed an assessment of whether
the Group would be able to continue as a going concern
until at least December 2024. In their assessment, the
Group has taken into account its financial position,
expected future trading performance, its debt facilities,
future debt servicing requirements, its working capital and
capital expenditure commitments and forecasts.
Based on a review of the Group’s budgets, cashflow
forecasts and its ability to flex its future exploration
spending to suit prevailing circumstances, the Directors
consider that the Group has adequate resources to
continue in its operational existence until at least December
2024. Key assumptions underpinning this forecast include
consensus analyst gold prices and production volumes in
line with annual guidance.
At 31 December 2022 the Group had an unrestricted
cash balance of US$3.83 million and available liquidity
of US$10.47 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 until at least December
2024, and that at this point in time there are no material
uncertainties regarding going concern.
The Directors have concluded that these circumstances
form a reasonable expectation that the Group has
adequate resources to continue in operational existence,
until at least December 2024. 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 2022
A number of new and amended standards and
interpretations issued have become effective for the first
time for financial periods beginning on (or after) 1 January
2022 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 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:
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
2.5
Basis of consolidation
2.5.1 Subsidiaries
Subsidiaries 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
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.
2.6
Foreign currencies
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
60
NOTES TO THE FINANCIAL STATEMENTS
61
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.
2.7
Revenue recognition
The Group enters into 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.
Revenue is measured based on the consideration to which
the Group expects to be entitled under the terms of a
contract with a customer. The consideration is determined
by reference to the gold market price at the point of
delivery. Consideration typically falls due upon delivery.
2.8
Inventory
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 and
processing assets.
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 viable.
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.
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.
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
25.0
Power generation and office equipment
12.5
Computer equipment
33.3
Motor vehicles
25.0
Furniture and fittings
16.7
The useful lives and residual values are re-assessed annually.
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
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.
2.11 Impairment of non-current assets
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.
Fair value 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
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.
62
NOTES TO THE FINANCIAL STATEMENTS
63
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:
◼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.
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
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;
◼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.
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
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.
a) Classification of financial assets
Financial assets that meet the following conditions are
measured subsequently at amortised cost using effective
interest rate method:
◼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.
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.
64
NOTES TO THE FINANCIAL STATEMENTS
65
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.
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
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
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.
3.1
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 indicators 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 discount rates,
gold prices, operating expenditure, capital expenditure,
production, reserves and resources and also the impact of
any legislative changes in Tanzania. Refer to note 12 for
further details.
3.2
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.
3.3
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
introduced 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 totalling US$23.1 million
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 legally, 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 legal advice
obtained, the 2017–2020 VAT balance is considered
receivable, however, significant uncertainty exists regarding
the timing of receipt. Therefore the balance has been
reclassified to non-current receivables and discounted to
take into account the time value of money. A discount rate
of 6.5% (31 December 2021: 6.0%) has been applied to the
expected cash receipts inclusive of estimated country credit
risk. A 1% increase in the discount rate would increase the
provision by US$0.4 million and a one-year delay would
increase the provision by US$1.3 million. Refer to note 17
for further information.
Key sources of estimation uncertainty are set out as follows:
66
NOTES TO THE FINANCIAL STATEMENTS
67
3.4
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
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.
3.5
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.
3.6
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.
3.7
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.
3.8
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 (2021: US$0.5 million) on the provision for
environmental and site restoration. The value of the year-
end decommissioning provision is disclosed within note 21.
3.9
Silver Stream obligation
Under the silver streaming agreement (note 19) 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$23.9 /oz at the
end of 2022 (2021: US$23.8 /oz). A 1% change in silver
production estimates would result in an impact of less than
US$0.1 million (2021: 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-22
31-Dec-21
Revenue from contracts with customers
114,055
103,571
All revenue is derived from sales of gold from one
geographic location and to one customer.
5.
Fair value movement on non-hedge derivatives and
other commodity contracts
US$000
31-Dec-22
31-Dec-21
Valuation of open commodity swaps
81
–
During the year the Group entered into Asian commodity
option contracts which provide a guaranteed protection of
the gold price at the Floor and participation in favourable
movements in the gold price up to the Cap. There were no
commodity option contracts in place during 2021.
A mark to market valuation of open option contracts was
done at 31 December 2022. This resulted in derivative
financial liability of US$81,000 (2021: US$nil) as the monthly
average gold price on the open instruments was above the
fixed cap prices of these instruments.
During the year no gains or losses were realised on the
closed option contracts, as the monthly average gold
prices were within the fixed Floor and Cap prices of the
instruments.
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
At 31 December 2022, the following open option contracts
were in place.
Product
Floor
(US$)
Cap
(US$)
Monthly
average
(US$)
Start date
End date
Quantity
Mark to
market
(US$)
Gold - USD
1,600
1,950
1,796.74
01-12-2022
31-12-2022
1,333
–
Gold - USD
1,725
1,756
1,796.74
01-12-2022
31-12-2022
2,000
(81,000)
Loss on non-hedge derivatives
(81,000)
6.
Finance income
US$000
31-Dec-22
31-Dec-21
Bank interest
4
1
Change in estimate of decommissioning
liability (note 21)
–
547
Fair value adjustment on Silver Stream
advance (note 19)
421
2,464
425
3,012
7.
Finance expense
US$000
31-Dec-22
31-Dec-21
Interest on loans and other borrowings
1,430
532
Interest on lease liabilities (note 13)
64
87
Interest on Silver Stream advance (note 19)
1,180
1,341
Change in estimate on Silver Stream
advance (note 19)
-
617
Convertible Loan Note accretion (note 20)
–
22
Finance expense at amortised cost
2,675
2,599
Unwinding of present value adjustment of
rehabilitation provision (note 21)
860
1,026
Purchase of silver to fulfil silver stream
obligation
–
354
VAT receivable credit adjustment (note 17)
–
2,700
Total finance expense
3,535
6,679
The finance expense arising on financial liabilities measured
at amortised cost has been calculated using the effective
interest rate method.
8.
Profit before taxation
Profit before tax is arrived at after charging:
US$000
31-Dec-22
31-Dec-21
Depreciation of tangible assets (note 12)
16,190
16,039
Amortisation of right of use assets (note 13)
535
961
Directors’ remuneration
2,386
1,888
Staff costs
16,770
16,556
Auditor’s remuneration
Audit fees of the Company and Group
221
175
Audit fees of subsidiaries by associates of
Group auditor
79
56
Audit fees of subsidiaries by other auditors
–
36
Audit-related fees for review of interim
information
34
21
9.
Taxation
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
31-Dec-22
31-Dec-21
Current tax charge (corporate and turnover
tax charge)
6,425
5,238
Deferred tax charge / (income)
(1,201)
1,930
Net charge
5,224
7,168
68
NOTES TO THE FINANCIAL STATEMENTS
69
The tax charge for the year can be reconciled to the profit
before taxation per the statement of comprehensive
income as follows:
US$000
31-Dec-22
31-Dec-21
Profit before taxation
2,925
1,000
Tax at the standard tax rate
Tanzanian/Kenyan Corporation tax at 30%
878
300
Different tax rates applied in overseas
jurisdictions
963
1,180
Permanent adjustments
5,405
2,905
Unrecognised taxable losses in subsidiaries
5,724
2,395
Adjustments in respect of prior periods
77
388
Capital allowances in excess of depreciation
(6,903)
–
Other movements
(920)
–
Tax charge
5,224
7,168
Deferred tax
US$000
31-Dec-22
31-Dec-21
Deferred tax liability
(11,180)
(12,381)
At the end of the year, the Group had tax losses
available in Tanzania amounting to US$55,468,000 (2021:
US$47,970,000). Of these losses, US$24,871,000 (2021:
US$23,579,000) 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$30,597,000 (2021: 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
(2021: US$5.2 million) relating to deferred tax liability on
the acquisition of Shield Resources Limited and Boulder
Investments Limited.
The movement in deferred tax assets and liabilities during
the year is as follows:
(US$000)
Deferred
tax asset
Deferred
tax liability
Net
deferred tax
liability
At 1 January 2021
–
(10,451)
(10,451)
Accelerated tax depreciation
–
(2,050)
(2,050)
Other movements
–
120
120
At 31 December 2021
–
(12,381)
(12,381)
Accelerated tax depreciation
–
281
281
Other movements
–
920
920
At 31 December 2022
–
(11,180)
(11,180)
10. Loss per share
Basic loss per share is computed by dividing the loss
attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding
during the year.
31-Dec-22
31-Dec-21
Loss for the year attributable to equity
holders of Company
(2,299)
(6,168)
Loss used in calculation of basic
earnings per share (see below)
(2,299)
(6,168)
Basic loss per share (US cents)
(0.220)
(0.589)
Weighted average number of shares
in issue
1,047,885,766
1,047,885,766
There were no share incentives outstanding at the end
of the year that could potentially dilute basic earnings
per share.
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
11. Intangible assets
US$000
Owned
prospecting
licences
Third party
primary mining
licences
Owned mining
licence
Third party
mining licence
Acquired
exploration
and evaluation
assets
Total
At 1 January 2021
24
387
183
251
42,498
43,343
Additions
–
–
–
–
–
–
Amortisation
–
–
–
–
–
–
At 31 December 2021
24
387
183
251
42,498
43,343
Additions
–
–
–
–
–
–
Amortisation
–
–
–
–
–
–
At 31 December 2022
24
387
183
251
42,498
43,343
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.
Impairment of licences
In accordance with the Tanzanian Mining Act 2010 renewal
of Prospecting Licences involves a tender process.
Licences which are viable and are pending renewal are not
considered impaired.
At the year-end there were 47 active licences relating
to the Lupa Goldfields (2021: 59). The Group’s Lupa
Goldfields licences are considered to be a single CGU and
are assessed collectively. Management have concluded
that whilst some of the Lupa Goldfields licences acquired
in 2013 are no longer in the portfolio, no impairment has
been identified.
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 2023. 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.
70
NOTES TO THE FINANCIAL STATEMENTS
71
12. Property, plant and equipment
US$000
Gold
processing
plant
Mining
assets
Assets under
construction1
Mining
and other
equipment
Decom-
missioning
asset
Deferred
stripping
asset
Total
Cost
At 1 January 2021
42,732
132,354
21,998
32,893
3,906
36,219
270,102
Additions
–
8,494
18,871
206
675
–
28,246
Asset transfers
2,264
3,794
(11,895)
5,837
–
–
–
At 31 December 2021
44,996
144,642
28,974
38,936
4,581
36,219
298,348
Accumulated Depreciation
At 1 January 2021
31,765
98,913
–
22,554
3,906
35,515
192,653
Charge for the year
2,350
9,877
–
3,724
–
88
16,039
At 31 December 2021
34,115
108,790
–
26,278
3,906
35,603
208,692
Net book value
At 31 December 2021
10,881
35,852
28,974
12,658
675
616
89,656
Cost
At 1 January 2022
44,996
144,642
28,974
38,936
4,581
36,219
298,348
Additions
–
8,387
29,529
441
3,908
–
42,265
Asset transfers
–
2,988
(6,128)
3,140
–
–
–
At 31 December 2022
44,996
156,017
52,375
42,517
8,489
36,219
340,613
Accumulated Depreciation
At 1 January 2022
34,115
108,790
–
26,278
3,906
35,603
208,692
Charge for the year
2,355
9,348
–
4,156
57
274
16,190
At 31 December 2022
36,470
118,138
–
30,434
3,963
35,877
224,882
Net book value
At 31 December 2022
8,526
37,879
52,375
12,083
4,526
342
115,731
1. Assets under construction primarily relate to capitalised costs at the Singida Project and
ongoing phases of underground development at New Luika.
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
13. Leases
US$000
Mining
and other
equipment
Right of use assets
At 1 January 2021
3,260
Additions
14
Amortisation
(961)
At 31 December 2021
2,313
Additions
962
Amortisation
(535)
31 December 2022
2,740
Lease liabilities
At 1 January 2021 (note 19)
1,757
Additions
868
Interest expense (note 7)
87
Interest paid
(90)
Lease payments
(1,134)
Foreign exchange movements
(64)
At 31 December 2021 (note 19)
1,424
Additions
1,256
Interest expense (note 7)
64
Lease payments
(1,348)
Foreign exchange movements
(40)
At 31 December 2022 (note 19)
1,356
31-Dec-22
31-Dec-21
Current lease liabilities
Solar power units 1
–
44
Mobile equipment 2
147
324
Mobile equipment 3
–
281
Mobile equipment 4
395
–
Office space 5
43
16
Office space 6
80
–
665
665
Non-current lease liabilities
Mobile equipment 2
–
162
Mobile equipment 3
–
597
Mobile equipment 4
634
–
Office space6
57
–
691
759
Total lease liabilities
1,356
1,424
(1) 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. The lease
was not renewed at the end of 2022.
(2) 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.
(3) Mobile equipment: 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.
(4) Mobile equipment: A lease for mobile equipment from Sandvik for a capital amount of
$999,000 repayable bi-annually over thirty-six months commencing on 20 June 2023.
(5) Office space: A lease for office space from Nevada Golden Coins Limited for an eighteen
month period commencing November 2022.
(6) Office space: A lease for office space from Innovative Management Services Limited for a two
year period commencing 1 January 2022.
72
NOTES TO THE FINANCIAL STATEMENTS
73
14. Subsidiary companies
At 31 December 2022, the Group had the following
subsidiary undertakings:
Name of company
Holding
Country of Incorporation
and principal place of
business
Principal activity
Shanta Gold Holdings Limited
100%
Guernsey
Holding Company
Chunya Gold Holdings Limited
100%
Guernsey
Holding Company
Shanta Gold Kenya (Guernsey) Limited
100%
Guernsey
Holding Company
Boulder Investments Limited
100%
Cyprus
Investment Company
Shanta Gold Mauritius Limited
100%
Mauritius
Investment Company
Shanta Mining Company Limited
100%
Tanzania
Exploration and mining
Singida Resources Public Limited Company
100%
Tanzania
Exploration and mining
Shield Resources Limited
100%
Tanzania
Exploration and mining
Mgusu Mining Limited
100%
Tanzania
Exploration and mining
Nsimbanguru Mining Limited
100%
Tanzania
Exploration and mining
Shanta Gold Kenya Limited
(formerly Acacia Exploration (Kenya) Limited)
100%
Kenya
Exploration and mining
Chunya Resources Limited
100%
Tanzania
Dormant
Songea Resources Limited
100%
Tanzania
Dormant
Kakapo Resources Limited
100%
Tanzania
Dormant
Dondoro Resources Limited
100%
Tanzania
Dormant
Shanta Gold UK Limited
100%
United Kingdom
Dormant
15. Categories of financial assets and liabilities
US$000
31-Dec-22
31-Dec-21
Current assets measured at amortised cost
Trade and other receivables excluding tax and prepayments
219
230
Cash and cash equivalents
3,828
13,214
Total financial assets at amortised cost
4,047
13,444
Financial liabilities measured at amortised cost
Current financial liabilities
Loans and other borrowings (note 19)
(8,126)
(2,823)
Convertible loan notes (note 20)
–
–
Trade and other payables excluding tax
(26,208)
(17,169)
(34,334)
(19,992)
Non-current financial liabilities
Loans and other borrowings (note 19)
(19,316)
(3,454)
Total financial liabilities measured at amortised cost
(53,650)
(23,446)
Financial liabilities at fair value through profit and loss
Current financial liabilities
Asian commodity option contracts
(81)
–
Total financial liabilities measured at fair value through
profit and loss
(81)
–
Annual Report and Financial Statements 2022
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.
Loans and other borrowings 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.
16. Inventories
US$000
31-Dec-22
31-Dec-21
Plant spares and consumables
14,978
12,862
Gold in ore stockpile
15,272
10,632
Gold in gold room and CIL
5,957
3,740
36,207
27,234
The cost of consumable inventories consumed during the
year amounted to US$42.2 million (2021: US$27.3 million).
Plant spares and consumables increased in the year as a
result of additional procurement related to the build of the
new Singida Gold Mine.
17. Trade and other receivables
US$000
31-Dec-22
31-Dec-21
Non-current assets
VAT receivable 1
22,064
22,698
Current assets
Prepayments 2
1,748
1,363
VAT receivable 1
7,245
4,171
Other receivables 3
1,502
1,512
10,495
7,046
1. VAT receivable:
Non-current: 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 3.3) 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, reduced by the effect of value of money on the refunds or
offsets expected in the future, calculated by discounting the expected refunds/offsets to be
received over the next three years at a risk adjusted Tanzanian forecast inflation rate of 6.5%.
Included in the non-current portion of the VAT receivable is an amount due to Shanta Gold
Kenya Limited of US$0.8 million. The Kenyan tax authorities have temporarily put a hold on
repayments, however based upon external advice the amount is considered to be legally due
and expected to be refunded once the Kenyan tax authorities have completed their internal
restructure. Given the exact timing of repayment is outside of our control, the amount is
classified as a non-current receivable.
Current: 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
June 2022 to August 2022 have been approved for repayment in 2023, totalling US$8.1
million which is recognised as a current receivable. Refund applications for the period from
November 2022 to December 2022, which amount to US$2.3 million, require further audit
by the TRA before being formally approved.
In 2022, US$9.6 million of the brought forward VAT receivable was received as a cash refund/
offset in the year.
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.
3. Other receivables: Other receivables include an amount of US$1,282,000 (2021:
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 prior to file the appeal are
refundable to the Company
18. Trade and other payables
US$000
31-Dec-22
31-Dec-21
Trade payables
19,143
11,090
Accruals
7,065
6,079
26,208
17,169
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.
19. Loans and other borrowings
US$000
31-Dec-22
31-Dec-21
Current liabilities
Silver stream (note 19.1)
1,347
1,158
Loans payable to Standard Bank less than 1
year (note 19.2)
3,114
-
Stanbic overdraft payable (19.3)
3,000
1,000
Lease liabilities (note 13)
665
665
8,126
2,823
Non-current liabilities
Silver stream (note 19.1)
2,045
2,695
Loans payable to Standard Bank more than
1 year (note 19.2)
16,580
-
Lease liabilities (note 13)
691
759
19,316
3,454
Total loans and other borrowings
27,442
6,277
19.1 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% 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
74
NOTES TO THE FINANCIAL STATEMENTS
75
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
2022 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.
US$000
31-Dec-22
31-Dec-21
At 1 January
(3,853)
(5,590)
Value of silver transferred
1,221
1,231
Interest at the effective interest rate (note 7)
(1,180)
(1,341)
Adjustment for the value in future
estimates (note 6)
421
2,464
Change in estimate (note 7)
-
(617)
At 31 December
(3,391)
(3,853)
19.2 Loans payable to Standard Bank
In July 2022 the Company entered into a long term facility
agreement with Standard Bank Tanzania. The facility is for a
principal amount of $20 million and has a term of 4 years at
an interest rate of 8.34%. Repayment is in 12 equal capital
repayments quarterly from September 2023. The loan is
secured against the assets of the company.
19.3 Stanbic overdraft payable
The Company entered into an revolving loan facility with
Stanbic Bank in Tanzania to fund short term working capital.
The facility is for US$ 5 million of which US$ 3.5 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. The facility has been extended to US$10 million in
January 2023.
20. Convertible loan notes
US$000
31-Dec-22
31-Dec-21
At 1 January
–
9,999
Repayment
–
(9,807)
Cash paid interest
–
(662)
Coupon interest (note 7)
–
448
Accreted Interested (note 7)
–
22
Loan modification adjustment (note 7)
–
–
At 31 December
–
–
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.
21. Provision for decommissioning
US$000
31-Dec-22
31-Dec-21
Balance at 1 January
7,500
6,346
Unwinding of present value adjustment of
rehabilitation provision rate (note 7)
860
1,026
Change in estimate (note 6)
–
(547)
Change in estimate capitalised within
property, plant and equipment (note 12)
3,906
675
At 31 December
12,266
7,500
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
caused by mining operations. The liability was re-estimated
in the year to align with the updated mining schedule
announced in 2022 and uses a combination of the latest
Tanzanian and United States Sovereign Bond yields.
22. Share capital
Authorised
31-Dec-22
31-Dec-21
1,048,258,658 ordinary
shares of 0.01 pence each
£104,347
£104,347
Issued and fully paid
Number
£
US$000
At 1 January 2021
1,043,465,532
104,347
149
Issued in year
4,793,126
479
1
As at 31 December
2021
1,048,258,658
104,826
150
Issued in year
-
-
-
As at 31 December
2022
1,048,258,658
104,826
150
In 2021, 4,793,126 ordinary shares were issued to Executive
Directors and Senior Management in respect of 2020
performance bonuses. (2021: None) 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.
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
23. Share-based payments
Equity-settled share option scheme
Options in issue are as follows:
Grant date
Exercise price
Final exercise date
Number of options at
31 December 2022
Number of options at
31 December 2021
26 September 2011
25.00p
26 September 2021
–
–
6 January 2012
23.13p
6 January 2022
–
1,170,000
–
1,170,000
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.
31 December 2022
31 December 2021
Number
Weighted average
exercise price (£)
Number
Weighted average
exercise price (£)
Details of the share options outstanding during the year are:
Outstanding at 1 January
1,170,000
0.237
1,670,000
0.237
Lapsed share options
(1170,000)
0.250
(500,000)
0.250
Outstanding at 31 December
–
–
1,170,000
0.231
Exercisable share options at the end of year
–
0.231
1,170,000
0.231
All options outstanding at 31 December 2022 were
fully vested.
76
NOTES TO THE FINANCIAL STATEMENTS
77
24. Net cash flows from operating activities
US$000
31-Dec-22
31-Dec-21
Profit before taxation for the year
2,919
1,000
Adjustments for:
Depreciation/depletion of tangible assets
16,190
16,039
Amortisation of right of use assets
535
961
Unrealised exchange gains
7
(63)
Non-cash settlement of Silver Stream
obligation (note 10)
(1,221)
(1,231)
Finance income
(425)
(3,012)
Finance expense
3,535
6,679
Increase in provisions
(145)
–
Operating cash flow before
movement in working capital
21,395
20,373
(Increase) / decrease in inventories
(8,973)
2,806
Increase in receivables
(8,431)
(4,431)
Increase in payables
8,699
4,961
12,690
23,709
Taxation paid
(938)
(11,124)
Interest received
1
1
Net cash flow from operating
activities
11,753
12,586
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
25. Reconciliation of liabilities arising from financing
activities
US$000
Non-current
loans and other
borrowings
(Note 20)
Current loans and
other borrowings
(Note 20)
Convertible
loan notes
(Note 21)
Restricted cash
(Note 18)
Total
At 1 January 2021
4,270
5,713
9,999
(2,500)
17,482
Cash flows
–
(2,946)
(10,469)
2,500
(10,915)
Non-cash flows
Silver Stream
–
(1,231)
–
-
(1,231)
Finance lease obligations recognised
869
–
–
-
869
Interest accruing in the period
–
(335)
470
-
135
Effects of foreign exchange
–
(63)
–
-
(63)
Reclassification from non-current to current liabilities
(1,685)
1,685
–
-
-
At 31 December 2021
3,454
2,823
–
-
6,277
Cash flows
18,977
360
–
-
19,337
Non-cash flows
Silver Stream
–
(1,642)
–
–
(1,642)
Finance lease obligations recognised
999
257
–
–
1,256
Interest accruing in the period
(19)
2,261
–
–
2,242
Effects of foreign exchange
13
(41)
–
–
(28)
Reclassification from non-current to current liabilities
(4,108)
4,108
–
–
–
At 31 December 2022
19,316
8,126
–
–
27,442
26. 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.
26.1 Interest rate risk
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
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.
78
NOTES TO THE FINANCIAL STATEMENTS
79
The maturity of financial liabilities is as follows:
31 December 2022
US$000
Less than
3 months
3 months
to 1 year
Later than
one year but
no later than
five years
Loans and other
borrowings
(3,420)
(5,400)
(18,603)
Lease liabilities
(119)
(951)
(1,244)
Silver Stream
–
(1,347)
(2,045)
Derivative financial liability
(81)
–
–
Other payables and
accruals
(26,180)
–
–
(29,800)
(7,698)
(21,892)
31 December 2021
US$000
Less than
3 months
3 months
to 1 year
Later than
one year but
no later than
five years
Loans and other borrowings
–
(1,000)
–
Lease liabilities
(195)
(470)
(759)
Silver Stream
–
(1,158)
(2,695)
Other payables and
accruals
(17,169)
–
–
(17,364)
(2,628)
(3,454)
26.4 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.
The Group’s cash and cash equivalents are carried at an
effective interest rate of 1% (2021: 1%).
The revolving loan facility with Stanbic Bank bears interest
at 10% per annum. (2021: 10%).
The long term loan facility with Stanbic Bank bears interest
at the 3 month term Secured Overnight Facility Rate (SOFR)
plus 550 bps. (2021: Nil).
26.2 Credit risk
Credit risk arises when a failure by counter-parties 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, apart from the VAT disclosed as non-
current in Note 17, 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.
26.3 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.
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
(US$000)
USD
TZS
EUR
GBP
ZAR
KSH
Total
Trade and other receivables
1,492
–
–
–
–
10
1,502
Cash and cash equivalents
3,667
25
–
15
–
121
3,828
Trade and other payables
(17,652)
(6,682)
(440)
(120)
(312)
(1,002)
(26,208)
Loans and other borrowings
(27,442)
–
–
–
–
–
(27,442)
Net exposure
(39,935)
(6,657)
(440)
(105)
(312)
(871)
(48,320)
31 December 2021
(US$000)
USD
TZS
EUR
GBP
ZAR
KSH
Total
Trade and other receivables
1,485
–
–
–
–
28
1,513
Cash and cash equivalents
12,967
83
–
118
–
46
13,214
Trade and other payables
(10,449)
(5,117)
(81)
(341)
(227)
(954)
(17,169)
Loans and other borrowings
(5,731)
–
(546)
–
–
–
(6,277)
Net exposure
(1,728)
(5,034)
(627)
(223)
(227)
(880)
(8,719)
The Group’s policy is, where possible, to allow Group
entities to settle liabilities denominated in their functional
currency. In order to monitor the continuing effectiveness
of this policy, the Board reviews quarterly the liabilities,
analysed by the major currencies held by the Group of
liabilities due for settlement and expected cash reserves.
The following significant exchange rates applied
during the year:
Average rate
Closing rate
2022
2021
2022
2021
TZS : US$
0.0004
0.0004
0.0004
0.0004
EUR : US$
1.0538
1.1832
1.0726
1.1395
GBP : US$
1.2369
1.3757
1.2098
1.3499
KSH : US$
0.0085
0.0091
0.0081
0.0092
26.5 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.
80
NOTES TO THE FINANCIAL STATEMENTS
81
27. 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:
2022
US$000
Tanzanian
Assets
West Kenya
Project
Total
Revenue
114,055
–
114,055
Segment result
6,352
(8,651)
(2,299)
Operating profit / (loss)
14,686
(8,651)
6,035
Financial income
425
–
425
Financial expense
(3,535)
–
(3,535)
Taxation
(5,224)
–
(5,224)
Profit / (loss) attributable
to equity holders of the
parent company
6,352
(8,651)
(2,299)
Segment assets
213,082
21,326
234,408
Segment liabilities
(81,443)
(998)
(82,441)
Non-current asset additions
25,860
8
25,868
2021
US$000
Tanzanian
Assets
West Kenya
Project
Total
Revenue
103,571
–
103,571
Segment result
1,152
(7,320)
(6,168)
Operating profit / (loss)
11,987
(7,320)
4,667
Non-operating expenses
(2,700)
–
(2,700)
Financial income
548
–
548
Financial expense
(1,515)
–
(1,515)
Taxation
(7,168)
–
(7,168)
Profit / (Loss) attributable
to equity holders of the
parent company
1,152
(7,320)
(6,168)
Segment assets
184,896
20,608
205,504
Segment liabilities
(47,768)
(954)
(48,722)
Non-current asset additions
19,723
29
19,752
28. 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 31–33.
Executive Directors are considered key management.
29. Commitments
The Directors confirm that the Group had capital
commitments of US$3.2 million (2021: US$2.8 million)
relating to underground mining equipment at New Luika
and capital items on order at Singida.
30. Dividend per share
US$000
31-Dec-22
31-Dec-21
Final dividend for 2021 of £0.001 per
ordinary share
1,258
1,486
Interim dividend for 2022 of £0.001 per
ordinary share
1,258
1,486
2,516
2,972
A final dividend in respect of the year ended 31 December
2022 of £0.001 per ordinary share, equivalent to
approximately US$1.25 million, is to be proposed at
the annual general meeting. These financial statements
do not reflect this dividend payable as it is subject to
shareholder approval.
31. Contingent liabilities
Contingent liabilities identified as at 31 December 2022
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. As at 31 December 2022, it is not probable
that these conditions will be met, therefore no amount
has been recognised.
(ii) 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.
No liability or provision has been recognised within the
2022 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 US$2 million.
Annual Report and Financial Statements 2022
NOTES TO THE FINANCIAL STATEMENTS
(iii) Shanta Mining Company Limited, a subsidiary of Shanta
Gold Limited has an ongoing dispute with the Tanzania
Revenue Authority (TRA) regarding the deductibility
of royalty payments for income tax purposes with a
potential tax exposure of US$6.3 million.
Based on discussions with the TRA, it appears that
the intention of the government to amend this law
was to remove royalty from being tax deductible, but
there are gaps in the law which give an advantage to
the Company under strict interpretation of the law.
Professional legal and tax advice has confirmed that
SMCL has a strong case to defend and settlement is
unlikely, as a result no liability has been recognised in
the financial statements
The Directors confirm that they are not aware of any other
contingent liabilities as at 31 December 2022.
82
NOTES TO THE FINANCIAL STATEMENTS
85
Annual Report and Financial Statements 2022
Notice is hereby given that the eighteenth Annual General Meeting of the shareholders of the Company will be held
at 11 New Street, St Peter Port, Guernsey, GY1 3EG on 28 April 2023 at 11.30am (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 2022.
2.
To receive and consider the report of the directors of the Company
3.
To receive and consider the report of the auditors of the Company
4.
To approve the Directors’ remuneration paid for the year to 31 December 2022 as detailed in the 2022 Annual Report
and Accounts
5.
To re-appoint BDO LLP as the auditors of the Company
6.
To approve the Non-Executive Directors’ aggregate fees for the period between 1 January 2023 to
31 December 2023 inclusive to be US$405,000
7.
To authorise the directors to fix the remuneration of the auditors as the directors see fit
8.
To consider and if thought fit re-elect Anthony Peter Wynn Durrant as director of the Company who retires by rotation
and who makes himself available for re-election as a director of the Company
9.
To approve a final dividend proposed by the Directors of 0.10 pence per share.
Dated 28 March 2023
By order of the board
Director
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 of the Annual General Meeting
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.
86
NOTICE OF THE ANNUAL GENERAL MEETING
87
Annual Report and Financial Statements 2022
Ordinary Resolutions—Ordinary Business
For
Against
Vote
withheld
1. To receive and consider the profit and loss account and the balance sheet of the Company
for the financial year ended 31 December 2022.
2. To receive and consider the report of the directors of the Company.
3. To receive and consider the report of the auditors of the Company.
4. To approve the Directors’ remuneration paid for the year to 31 December 2022 as detailed
in the 2022 Annual Report and Accounts.
5. To re-appoint BDO LLP as the auditors of the Company.
6. To approve the Non-Executive Directors’ aggregate fees for the period between
1 January 2023 to 31 December 2023 inclusive to be US$405,000.
7. To authorise the directors to fix the remuneration of the auditors as the directors see fit.
8. To consider and if thought fit re-elect Anthony Peter Wynn Durrant as director of the
Company who retires by rotation and who makes himself available for re-election as a
director of the Company.
9. To approve a final dividend proposed by the Directors of 0.10 pence per share
As a shareholder of the Company you have the right to attend, speak and vote at the eighteenth 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’.
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 28 April 2023 at 11.30am 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).
I/We
of
being (a) member(s) of the Company entitled to attend and vote at meetings, hereby appoint:
Form of proxy
Date
Signature(s) or common seal (see Note 3)
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”).
88
FORM OF PROXY
89
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.
Completion and return of this Form of Proxy does not preclude a member subsequently attending and
voting at the Meeting.
Notes to the proxy form
Annual Report and Financial Statements 2022
NOTES TO THE PROXY FORM
90