Gold produced rose 7% to 20,416 ounces in the March quarter compared to the preceding three months, while cash generated was US$6.6mln.
Underground mining at New Luika also got underway with 15,171 tonnes of underground ore processed at a grade of 10.61 g/t.
Commercial production is on schedule for the end of this quarter said Toby Bradbury, chief executive.
Cash costs rose to US$553 per ounce but remain very competitive with other similar scale mines and compare to a gold price currently of around US$1,250 per ounce.
New mine plan for the next stage at New Luika
Shanta recently published a revised mine plan for New Luika that increases production by 39% to 500,000 by 2023 based on reserves at deposits nearby.
The plant will be extended by four years to maximise its value and mine life while the plan includes additional open pit reserves at Elizabeth Hill and further underground reserves at Ilunga.
“The plan provides for a longer mine life, increased production and most importantly, greater returns for all Shanta stakeholders,” said Bradbury.
"Considerable depth has been added to an already robust business case due to our delivery over the past 18 months and we will look to extend the planning horizon for the New Luika operation again in future.”
Why is it important to extend New Luika’s life?
One of the issues for investors has been the mine life was relatively short and the switch to underground exploration is designed to rectify that.
New Luika comprises nine deposits in the south of Tanzania.
Two of these, Bauhinia Creek and Luika, are the current source of the ore being processed.
The pit at Bauhinia Creek has a remaining life of around two years, after which it will be replaced by underground mining.
High-grade ores from the underground mine will be mixed with lower grade ores from open pits and by mid-2017 around 70% of gold will be mined underground.
Satellites key to longer term development
Ilunga and Elizabeth HIll are set to be the first of the satellites to be developed.
"Ilunga 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."
Bradbury added that the majority of the Ilunga ounces will form part of an underground operation that would start as the Luika deposit is depleted in around 2020.
"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."
There has also been a recent discovery at the Nkuluwusi target.
Promising start to move underground
Bradbury added the first quarter 2017 had been a promising start to the year, with a greater margin than planned and putting it on track to meet 2017 guidance of 80-85,000oz at all-in costs between US$800-850/ oz.
“Due to the move underground, the company anticipates Q2 2017 gold production to be its lowest quarter for 2017, as it moves through the ramp-up process of the underground production."