* Shanta Gold to raise £15.1 million, before expenses, through the issue of 83,927,667 new ordinary shares at 18 pence per share to new and existing institutional shareholders in the United Kingdom
* Proceeds to be used to continue to transform the Company from an explorer to a producer by bringing the New Luika Gold Mine into production in December 2011, and financing the exploration and joint venture agreement with Great Basin Gold [TSX: GBG] announced on the 1st June 2011
* New Luika Gold Mine is expected to produce 175,000 - 190,000 ounces over the first three years at an average grade of 3.5/3.8Au grams per tonne from December 2011 at an average cost of US$560 to US$610 per ounce.
Shanta Gold Ltd, (AIM: SHG), the gold development company operating in Tanzania, is pleased to announce that it has received commitments from new and existing institutional investors in the United Kingdom for a placement to raise approximately £15 million, before expenses, through the issue of 83,927,667 new ordinary shares at an issue price of 18 pence per share ("Placing Shares"). .
The New Luika Gold Mine aims to produce 175,000 - 190,000 ounces over the first three years at an average grade of 3.5/3.8Au grams per tonne at an average cost of US$560 to US$610 per ounce from December 2011.
Walton Imrie, Executive Chairman of Shanta Gold, commented on the placement: "We are very pleased to have received such a high level of support from new and existing institutional shareholders for this capital raising. The proceeds will enable Shanta to continue to transform from an exploration company into a gold producer, as we remain on track to bring the New Luika Gold Mine into production in December of this year. The New Luika Gold Mine is targeting production of 175,000 - 190,000 ounces of gold for the first three years and has the opportunity to be very cash generative. Furthermore, we are able to finance the initial exploration activities in the Lupa Goldfield to meet the agreement with Canadian listed Great Basin Gold."
The Placing is conditional, inter alia, on the admission of the Placing Shares to trading on the AIM market of the London Stock Exchange plc ("Admission"). The net proceeds of the Placing after allowing for expenses are expected to be £14.3 million.
The Placing Shares will, when issued, represent 46.47 per cent of the issued ordinary share capital of the Company as enlarged by the issue of Placing Shares. The total number of voting shares in issue immediately following Admission will be 264,545,124.
Application will be made to the London Stock Exchange plc for the Admission of the Placing Shares and it is expected that admission will take place at 8.00 a.m. on 15 July 2011. The Placing Shares will, when issued, rank pari passu in all respects with the Company's existing ordinary shares.
Working capital loan facility
Shanta Gold is pleased to announce that it has arranged a working capital loan facility with Yorkville Advisors SPV LLP ("YA") totalling US$3,400,000. This facility is backed by the Company's existing standby equity drawdown agreement with YA, which was announced on 18 December 2009.
Under the agreement, Shanta Gold will pay a coupon of 8% per annum on any sums drawn down and the facility is repayable monthly, with the final repayment in July 2012.
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