Update: Shanta Gold Earnings

Sep. 1.14 | About: Shanta Gold (SAAGF)

Summary

Shanta Gold announces $58.3M in revenue and a net profit of $4.1M for H1 2014.

I was expecting good numbers, and this seems to reconfirm that Shanta Gold is improving its operating profile.

The investment thesis remains standing, and I expect further efficiency improvements.

Shanta Gold (OTC:SAAGF) has announced its financial results for the first half of 2014 and these are quite good as the company produced just over 42,000 ounces of gold and sold 44,500 ounces for a total revenue of $58.3M. As the all-in sustaining cost per ounce was just $965/oz, the company's operating margin was pretty decent. The company now also has hedged 30,000 ounces at an average price of $1319/oz which is higher than the current gold price, which means that the hedge book is currently in the money by approximately $1M.

As expected, Shanta Gold produced a lot of gold at very competitive all-in costs. This allows the company to reiterate its full-year production guidance of 80-83,000 ounces of gold, which means that only 38-41,000 ounces will have to be produced in H2 of this year, which definitely is a very achievable goal. As the AISC is expected to remain between $900-1000/oz, the operating margin should remain very healthy at $250-300/oz.

No surprises here, and as I expected in my previous article, Shanta Gold is increasing its production rate and lowering its costs. And I expect further cost reductions given the fact that the recovery rates of both the gold and silver will increase further (resulting in more produced ounces for the same amount of fixed costs) and a lower energy bill as the mine is now running on cheaper fuel. I'm looking forward to seeing the updated mine plan and mine life which should be revealed in the final quarter of this year.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.