Gold mining company Shanta Gold (AIM: SHG) and junior exploration company Helio Resource (TSXV: HRC) have entered into a definitive agreement on 19th June 2017 pursuant to which the former will acquire all of the issued and outstanding common shares of the latter.
Canadian based Helio Resource owns 100% of the Saza-Makongolosi Project (SMP) gold project that covers an area of 238km2 in the Lupa Goldfield in Southwest Tanzania, adjacent to the New Luika Gold Mine (NLGM) operated by Shanta Gold.
Helio’s resource consists of an NI 43-101 compliant gold resource of 635k gold oz at an average grade of 2.4g/t.
All of these resources are located within 20km of the Shanta’s existing NLGM processing plant.
The acquisition will result in an increase in Shanta’s gold resource ounces of 77% from 824koz at 1.9g/t to 1,459koz at 2.09g/t.
Dr. Toby Bradbury, CEO of Shanta commented: “The inclusion of the Helio resources into Shanta’s portfolio strengthens the opportunity to deliver an expansion option for the New Luika Gold Mine and to also potentially extend mine life. This comes after our recent announcement of the Nkuluwisi resource of 4 million tons for 141k oz at 1.1g/t. New Luika is well established with long-term water security and low cost and long life power servicing an established and efficient processing plant.”
Richard Williams, CEO of Helio commented: “After many years of exploration efforts and a number of economic assessment studies it is clear that the best outcome for Helio shareholders is to combine with Shanta for the development of Helio’s gold resources on its SMP property in Tanzania. This all share transaction represents a unique opportunity for Helio shareholders to participate in the future growth and value creation of the New Luika Gold Mine.”
Tanzania gold reserves are estimated at about 45m ounces (oz). Gold exploration has been centred mostly on the greenstone belts around Lake Victoria, where several large deposits have already been discovered and are being developed.
In April 2017, Shanta announced its production and operational results for Q1 2017 for NLGM, showing an increase of in the gold production of +8% compared to Q4 2016.