Shares in metal explorer Shanta Gold soared 16% on Wednesday afternoon, as it reported a significant increase in resources and gold at its Tanzania mine.
Indicated resource at the Ilunga satellite deposit at the New Luika mine in the Lupa goldfields increased by 406% to 205,347 ounces of gold. Tonnage increased by 336% to about 1.35m tonnes and indicate.
Indicated resource gold grade rose 17% to 4.71 grams per tonne and total Ilunga resources was upgraded to 257,965 ounces at 4.55 grams per tonne from 73,940 ounces at 3.51 grams per tonne.
The AIM-listed company said the updated Australasian Joint Ore Reserves Committee (JORC) code compliant resource estimate will fast-track development at the underground reserve at the mine during first quarter of 2017.
The underground material from Ilunga was not included within the base case mine plan, reported by Shanta in September 2015, and it will incorporate these resources into the mine plan.
The Ilunga 29 drill hole programme between March and July which included one diamond from surface, 20 with reverse circulation with diamond tails and eight were reverse circulation. Diamond drilling totalled 1,844 metres and reverse circulation 3,672 metres for a total 5,516 metres.
Shanta aims to explore, optimise and upgrade prospects within the mining licence at the Lupa goldfields, and on nearby sites held by the company. The Singida licence remain underexplored as drilling at the site has recently restarted with results expected in September.
All deposits at the New Luika mine, remain open at depth and will be explored to provide a rolling mine life for more than seven years.
Chief executive Toby Bradbury, said: "We are delighted with the upgraded resource figures from Ilunga. The deposit is a good grade, close to the plant and is likely to contribute to a meaningful increase in the mining reserve which in turn enhances shareholder value. We expect that the majority of the Ilunga ounces will form part of a new high grade underground operation that would start as the Luika deposit is depleted in around 2020.
"At this stage, the company envisages developing Ilunga using cash generated from operations and to utilise existing equipment and personnel to take the new development in its stride. The potential of this high grade extension creates the option to blend with, among others, the upgraded Elizabeth Hill reserve declared earlier this year and thus extend the mine life by a number of years with a lot more prospective exploration still in play."
Shares in Shanta Gold were up 16.14% to 10.74p to 1159 BST.