Shanta Gold : West Kenya Project Scoping Study

13 October 2020

Shanta Gold Limited

("Shanta Gold", "Shanta" or the "Company")

West Kenya Project Scoping Study

Shanta Gold (AIM: SHG), the East Africa-focused gold producer, is pleased to announce the results of an independent Scoping Study for the high grade West Kenya Project ("the Project") in western Kenya.

Project Highlights

Production Potential

• Life of Mine ("LOM") gold production of 949,000 ounces ("oz");
• Average annual gold production of 105,000 oz for 9 years;
• Average head grade mined at 9.3 g/t;
• Open pit mining for 2 years followed by underground mining;
• Conventional CIL processing plant with annual processing capacity of 480 kt;
• Cut-offgrade of 3.6 g/t for underground Long Hole Open Stoping ("LHOS"); and,
• Production schedule does not include any potential future exploration success.

Costs1

• LOM C3 cash costs (including royalties) of US$582 /oz;
• LOM All In Sustaining Costs ("AISC") of US$681 /oz;
• LOM All In Costs ("AIC") of US$850 /oz inclusive of pre-production costs; and,
• Estimated pre-production capital cost of US$161 m.

Economics2

• LOM EBITDA of US$1,061 m, averaging US$118 m annually;
• LOM operating margin of 66%;
• LOM free cash flow of US$531 m;
• Post-taxNPV8% of US$340 m; and,
• Unlevered IRR of 110%.

Notes.

1. Cost figures are aligned with World Gold Council standards for reporting
2. Project economics have been prepared using a LOM gold price of US$1,700 /oz

Community Benefit and Value to Kenya

The Project Scoping Study is based on a NI 43-101 Inferred Resource which requires an investment by Shanta to undertake infill drilling and technical studies over the next 24-36 months to determine the economic viability of a potential mining operation. Moreover, should the economic viability of a mine be confirmed, the Scoping Study estimates pre-production capital investment of US$161 million will be required from Shanta prior to first gold production. Assuming Shanta proceeds with construction of the West Kenya Project through to the point of gold production, the following long-term benefits could arise:

• Community development, infrastructure, employment, skills development and training;
• Royalties on gold production, of which 70% would accrue to the Government of Kenya, 20% to the County, and 10% to the community according to the Mining Act in Kenya;
• A further 1% of gold revenues to be spent on community development under the terms

of the Community Development Agreement Regulations;

• Corporate income taxes and payroll taxes;
• Mining licence fees and other levies;
• Demand of local Kenyan supply chain, particularly in areas such as goods and services, transportation and communication;
• 10% Free Carried Interest to the Government of Kenya; and
• Numerous other indirect benefits to community and stakeholders.

Eric Zurrin, Chief Executive Officer, commented:

"The West Kenya Project Scoping Study has resulted in attractive project economics. As with all Scoping Studies there is a significant amount of work to be completed before the assumptions can be confirmed. The Board is committed to making the investment to confirm the viability of a mine with a construction decision expected within three years."

Analyst conference call and presentation

Shanta Gold will host an analyst conference call and presentation today, 13 October 2020, at 09:30 BST. Participants can access the call by dialling one of the following numbers below approximately 10 minutes prior to the start of the call or by clicking on the link below.

UK Toll-Free Number: 0800 358 6374

UK Toll Number: [phone]

PIN: 312393

https://events.globalmeet.com/Public/ClickToJoin/ZW5jPXREZWRtbEQvdklzUElFMFZaRXA

3dU5zaHl1NW5jVGVodEtGUTJ0WFZJNjVaZkZOWVhkK2JJdz09

Participant Passcode: 312393

The presentation will be available for download from the Company's website: www.shantagold.com

A recording of the conference call will subsequently be available on the Company's website.

Enquiries:
Shanta Gold Limited
Eric Zurrin (CEO)	[phone]
Luke Leslie (CFO)
Nominated Adviser and Broker
Liberum Capital Limited
Scott Mathieson / Clayton Bush / Louis Davies	[phone]
Broker
Tamesis Partners LLP
Charlie Bendon / Richard Greenfield	[phone]

About Shanta Gold Limited

Shanta Gold is an East Africa-focused gold producer. It currently has defined ore resources on the New Luika and Singida projects in Tanzania and holds exploration licenses covering approximately 1,200km2 in the country. Shanta Gold also owns the West Kenya Project in Kenya with defined ore resources of 1.2Mt grading 12.6 g/t. Shanta's flagship New Luika Gold Mine commenced production in 2012 and produced 84,506 ounces in 2019. The Company has been admitted to trading on London's AIM market and has approximately 849 m shares in issue. For further information please visit: www.shantagold.com.

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

West Kenya Project Overview

In August 2020 Shanta acquired Acacia Exploration (Kenya) Limited ("AEKL") from three subsidiaries of Barrick Gold Corporation ("Barrick"). AEKL's primary asset is a 100% interest in licences which includes an existing high-grade NI 43-101 compliant resource known as the West Kenya Project. The West Kenya Project is made up of two greenfield deposits, the Isulu and Bushiangala Prospects ("the Deposits") and includes mineral rights which cover an area of 1,161 km2. The following Table summarises the Project's resource by deposit.

Table 1 - NI 43-101 compliant resource summary1

Deposit	Resource	Ore	Grade	Contained
	Category	(Mt)	(g/t Au)	(koz Au)
Isulu	Inferred	2.5	13.0	1,060
Bushiangala	Inferred	0.4	9.9	122
Total		2.9	12.6	1,182

Note 1: Mineral Resource Estimate completed by the previous owner (Acacia Mining Plc ("Acacia")) in May 2018.

The West Kenya Project is located in western Kenya in the county of Kakamega. The project lies within the Liranda Corridor some 300 kilometres northwest of Nairobi, the capital of Kenya, and 30 kilometres north of the town of Kisumu.

Various work has been undertaken on the project historically by the previous owner (Acacia, and subsequently Barrick). A summary of historic work undertaken on the Project has been outlined as follows:

• 1920's to 1963: Various colonial prospectors and companies undertook small scale mining in the area;
• 1982 to 2000: Bureau de Recherches Geologiques et Minieres (BRGM) undertook stream and soil surveys as well as helicopter surveys;
• 2003 to 2007: AfriOre undertook soil sampling, rock chip sampling, pitting and trenching;
• 2007 to 2010: Lonmin Plc undertook soil surveys;
• 2010 to 2012: Aviva Mining Limited undertook soil surveys, rock chip sampling, geophysical surveys, geological mapping, RC and DD drilling; and,
• 2012 to 2018: Acacia undertook detailed geological mapping, geophysical surveys, RC and DD drilling. This work led to the declaration of a maiden mineral resource estimate ("MRE") in February 2017. This was followed by an updated MRE in May 2018.

Scoping Study Overview

Following Shanta's purchase of the Project, the Company has engaged Bara Consulting (Pty) Limited ("Bara Consulting") to update previous scoping study work undertaken by Acacia for new work undertaken by Shanta, focused on the mining and costing aspects of the study. Shanta's expertise in LHOS has enabled the Company to apply its established cost base at its New Luika Gold Mine ("NLGM") to the West Kenya Project, creating value and lending confidence to the underlying operating model. The resource models adopted for the Isulu and Bushiangala deposits have also been updated for Shanta's estimation approach, resulting in a minimal 1% difference in total ounces versus the most recent MRE completed by Acacia. All project economics have been independently prepared by Bara Consulting.

A discounted cashflow ("DCF") analysis using a gold price of US$1,700 /oz has been prepared, taking into consideration royalties, tax and government dividends based on a 10% free carry ownership in the project. The economic results yielded by this DCF analysis have been summarized in the Table below.

Table 2 - West Kenya Project economics summary

	Metrics		Units		Results
	Milled Tonnes		Mt	3.45
	Recovered Content		Moz	0.95
	Recovered Grade		g/t	8.56
	Life of Mine (LOM)		Years	9
	Revenue (LOM)		US$m	1,614
	Operating Cost (LOM)		US$m	553
	Pre-production Capital Cost		US$m	161
	Sustaining Capital Cost (LOM)1		US$m	105
	Free Cashflow (Pre-Tax)		US$m	795
	C1 Cash Cost		US$/oz	463
	C3 Cash Cost		US$/oz	582
	AISC		US$/oz	681
	AIC		US$/oz	850
	Pre-Tax Project NPV8%		US$m		507
	Pre-Tax Project IRR		%		196
	Post-Tax Project NPV8%		US$m		340
	Post-Tax Project IRR		%		110
	Average Annual EBITDA		US$m		118
	Operating Margin		%		66

Note 1: Includes US$87 million of underground development costs incurred following pre-production development

Mining Method

A pit optimisation study has been undertaken for the Deposits to determine the potential for open pit mining at the Project. Based on this assessment an initial open pit at each of the Deposits has been shown to have potential. Following pit optimisation results, a pit shell has been selected for each deposit. Open pit mining will be by standard drill, blast, truck and shovel methods. Open pit mining is expected to benefit from free dig mining of oxide resources.

Underground mining will commence after open pit mining, with the proposed mining method for the Deposits being LHOS with backfill. LHOS is the underground mining method employed at the Company's producing asset in Tanzania, New Luika Gold Mine.