Shanta Gold #SHG – Multiple catalysts, multiple risks, low valuation

Opened a very small, c1.2% portfolio weight position in Shanta Gold.

Shanta is a London-listed Tanzanian small cap production company. It has a 33m GBP market cap and is trading at a forward PE of around 2.6 / historic of 3.2 or EV/EBITDA of c2. (source).

The company is a standard, small, gold producer.  It has a good cost base – cash cost c $505/oz / all in cost of c$750/oz. There appears to be lots of opportunity in its holdings to expand production. They have just released an RNS valuing their Singida project at c $31m USD at a (highly optimistic) 8% discount rate. They say they will develop it at no cost to existing shareholders – as the company is worth c$44m Equity and c$35m  net debt this is potentially significant – even if we say it’s only worth c $20m.

Continue reading “Shanta Gold #SHG – Multiple catalysts, multiple risks, low valuation”