TANZANIA SET TO RECEIVE $12.5-MILLION OUTSTANDING VALUE-ADDED TAX FROM SHANTA GOLD

East Africa-focused gold miner Shanta Gold has raised $14-million to provide the company with necessary financial headroom while it awaits the repayment of $12.5-million in outstanding value-added tax receivables from the Tanzanian government.

The funding will strengthen the Aim-listed company's balance sheet while it progresses the commercial underground production phase at NLGM.

Raising the $14-million through a share placement and direct subscription scheme Bradbury noted that the funds would simultaneously assist Shanta to incorporate the substantial resource that currently sits outside the NLGM mine plan.

It would also enable the continued exploration at Singida, as well as at targets within its highly prospective licence area of the Lupa goldfield.

Shanta Gold has also entered into a definitive arm's-length arrangement agreement to acquire all of the issued and outstanding common shares of the Helio valued at about £3.5-million.

The acquisition will give Shanta control of Helio’s assets located immediately next to its flagship New Luika gold mine (NLGM), which includes a 635 000 oz resource at the Saza-Makongolosi exploration project.

The proposed acquisition of Helio will be settled in exchange for 59.5-million Shanta shares and is expected to be completed in the third quarter.

The acquisition would further increase Shanta's gold resource from 824 000 oz at 1.9 g/t to 1.45-million ounces at 2.09 g/t. These ounces are not yet incorporated into NLGM's mine plan.

"The inclusion of the Helio resources into Shanta's portfolio strengthens the opportunity to deliver an expansion option for NLGM and to also potentially extend mine life,” said CEO Toby Bradbury.

Meanwhile, in terms of its debt restructuring, Shanta has accepted a credit approved commitment letter for a new $50-million Investec debt facility to replace the current $40-million facility, of which $35.3-million is outstanding.

Shanta is proposing the repurchase of the outstanding senior secured subordinated convertible loan notes, due April 2019, funded using the proceeds of the new Investec facility.

This would provide the company with a simplified debt structure, a reduced interest burden and enhanced working capital position, it stated.