Solar hybrid energy in tanzania curbs costs for shanta gold in grade 9 electricity test

With electricity accounting for about 60% of the processing costs of AIM-listed gold producer Shanta Gold at its New Luika mine in Tanzania, greater emphasis has been placed on creating a leaner cost structure, not only at the mine but throughout the company.

In his former roles at Shanta Goldas CFO in 2017, interim CFO in 2015/2016, and advisor to the CEO in 2013 – which entailed leading the company’s financial restructuring and leading an operational restructuring of the business as New Luika ramped up production – Zurrin has always had the company’s financial health at heart and was instrumental in demonstrating New Luika to be a sustainable, robust and reliable, low-cost gold producer.

One of Zurrin’s major strengths since taking on the role of CEO has been his ability to reduce costs, with cost reductions of US$8.7 million per annum on an annualised basis achieved in November (including $3.6 million from new mining method at New Luika).

Zurrin’s strong finance, investment and commercial expertise will not only help guide Shanta Gold through the next stage of its development, but will also prove invaluable for the company at a time when Tanzania is evolving, and in doing so, changing the legal framework governing the natural resources sector in the country, which has in turn accelerated the company’s cost control strategy.

Shanta Golds’ New Luikagold mine in south west Tanzania has been in operation as an opencast mine since 2012, having produced 80 000 oz of gold at an all-in sustaining cost (AISC) of US$747/oz in 2017 (ahead of its guidance) and is targeting 82 000 oz – 88 000 oz at an industry-leading AISC of between US$680 – US$730/oz in 2018.

The company has since transitioned from an exclusively surface mining operation to a predominantly underground operation, exploiting the Bauhinia Creek deposit from which it has produced over 250 000 t of ore at an average grade in excess of 6 g/t since producing first ore in May 2017.

Work at the Singida property, which consists of thee mining licences and four prospecting licences covering an area of 30 km 2 and 52 km 2 respectively, will entail exploring the targets that have been identified with a view to expanding the potential size of Singida and increasing the measured and indicated resource ounces.

In a country with high kilowatt per hour energy costs and an unstable national power grid that faces regularly occurring brownouts and blackouts, the solar hybrid solution has not only fulfilled the company’s power needs but has in doing so provided significant cost saving benefits for the company in terms of its overall power cost – one of the largest operational costs in most mining operations.

In February 2017, Shanta Gold commissioned a 7.5 MW power plant at a cost of $17 million. Supplied, operated and maintained by US-based turnkey infrastructure EPC provider Inglett & Stubbs International, the plant consisting of six generator sets which use both HFO and diesel fuel oil (DFO) as a feedstock.

“The plant’s commissioning was timed to the commencement of underground production and provides a longer term power facility which is able to cater for an extended mine life as additional resources are brought in to the mine plan,” explains Zurrin. Solar hybridisation

In addition to its 7.5 MW power plant, Shanta Gold also recognised the potential to adopt renewable energy on site, not only as a means to a green credential, but also as a means to supplement its energy needs at a time when cost conservation is key.

The expansion project is the second phase of the mines’ solar hybridisation. Deployed at the start of 2017 around the same time as the company produced first gold from the Bauhinia Creek deposit, the new 609 kW plant produces around 940 000 kWh per year in addition to the 63 kW pilot plant.

In terms of benefits, besides being significantly cheaper to operate than the HFO plant, phase 1 of the solar plant (pilot plant) resulted in a fuel saving of 28 000 litres per year which in turn reduced CO 2 emissions by 70 tpa and in phase 2, increased fuel savings to 250 000 litres and reduced CO2 emissions by 350 t.

“The introduction of a renewable energy component also has the added benefit of highlighting Shanta Gold’s culture of innovation, efficiency and cost leadership,” notes Zurrin, who adds that it has created an opportunity for the mining industry to move forward and be more forward thinking in the way in which it does business. You can read the full digital magazine here or subscribe here to receive a print copy