Bauhinia Creek Update

Shanta Gold limited

Further exceptional gold grades as well as lateral and depth extensions to the orebody at ShantA Gold's new Luika Gold mine in Tanzania

30 January 2012

Shanta Gold Limited, ('Shanta Gold' or the 'Company') (AIM: SHG), the near-term gold producer with operations in Tanzania, is pleased to announce further encouraging results achieved from the  new definition  reverse circulation ("RC") drilling campaign  at the Company's New Luika Gold Mine (NLGM) in an area where 'spectacular' gold grades were previously intersected. The raw data was made public on 29 June 2011.

The Bauhinia Creek orebody is the first of several satellite gold deposits to be exploited at the NLGM in the Chunya district of Tanzania. It is anticipated that the mining plan which will result from the updated resource at Bauhinia Creek will show an increase in strike length to be mined, a significant increase in the final depth of the Bauhinia Creek pit (200m versus the current plan of 100m) and an increase in both production ounces and grade. (The revised Resource Statement for NLGM is expected to be released at the end of April 2012). Additional holes targeted at depths between 80-200m vertical in the Bauhinia Creek orebody have continued the 'spectacular' intersections announced in June 2011.

Significantly, these changes in the outputs of the mine will result in a reduction in average escalated cost of production over the life of NLGM when compared to that previously published (escalated US1;054/oz; before escalated US$834). The drilling programme confirms previous evidence of high grade extensions as the orebody deepens to the west.

Gareth Taylor, Chief Executive Officer, said, "Although the interpretation and modelling of these results are still being finalised, we expect that they will have a significant effect on the NLGM Resource which will be announced at the end of April this year. I fully expect that the life of the Bauhinia Creek pit will be significantly extended which will result in high grade ore for the mills extending well past year five in the feed schedule, delivering better ounces produced and lower cost of production through those years. This is particularly pleasing as it displaces low grade tonnes currently scheduled after year five which resulted in the high average annual cost of production previously published".

Walton Imrie, Executive Chairman, commented; "The organic growth which we have always believed would take place at New Luika has come a little earlier than expected. This is excellent news for our shareholders and I am looking forward to the published resource statement in May and the revised financial results from the organic growth."

Highlights from the drilling programme

-   Borehole CSR332 - 10m at 26.9g/t in total
-   Borehole CSR324 - 11m at 21.71g/t in total
-   Borehole CSR325 - (31m at 12.97g/t in total, including 14m at 18.49g/t)
-   Borehole CSR338- 14m at 11.6g/t in total
-   Borehole CSR330 - 13m at 8.19g/t in total
-   Borehole CSR331 - 6m at 11.93g/t and 8m at 13.24g/t in total.

This drilling programme was undertaken to achieve improved understanding of the geometry of the orebody in relation to structural deformational features in the area, and provide additional information pertaining to gold grade (Figure 1: Shanta Gold website http://www.shantagold.com/im/press_display.asp?Id=2011/29june11) to the west of the current known mineralisation.

Shanta Gold exploration geologists were able to identify an extension of the Bauhinia Creek mineralised envelope to the west of the previously defined orebody. This extension of the mineralised zone is not developed at surface, as it is truncated by an oblique fault feature. At depth, in the footwall of the fault feature, robust mineralisation however still occurs.

Drilling was conducted at azimuths and inclinations designed to achieve perpendicular intersection of the ore body. Although the identified extension to the mineralised zone at Bauhinia Creek displays a slight strike inflection from normal, down hole intersection widths still approximate the true width of the orebody (Intersection angle with mineralised zone approximately 60-65 degrees).

Composite intersections are listed in the table below:
Table 1: Composite Intersections- Bauhinia Creek Definition Drilling Programme (No grade top-cut applied)

VERTICAL DEPTH	BHID	FROM	TO	INTERSECTION_WIDTH_m	Au_GRADE_g/t
80 - 100m	CSR323	100	106	6	2.14
	CSR332	59	69	10	26.90
100 - 120m	CSR324	106	117	11	21.71
	CSR325	108	119	11	12.82
			AND
	CSR325	119	125	6	0.40
			AND
	CSR325	125	139	14	18.49
	CSR325 : 108-139m			31	12.97
	CSR326	125	126	1	3.50
	CSR327	131	132	7	5.39

VERTICAL DEPTH	BHID	FROM	TO	INTERSECTION_WIDTH_m	Au_GRADE_g/t
120 - 150	CSR328	151	153	2	0.85
	CSR329	145	149	4	5.78
	CSR338	139	153	14	11.60
150 -200m	CSR330	158	171	13	8.19
			AND
	CSR330	171	174	3	0.25
			AND
	CSR330	174	191	17	3.66
	CSR330 : 158-191m			33	5.14
	CSR331	177	183	6	11.93
	CSR333	132	140	8	13.24
	CSR334	199	209	10	3.57
	CSR335	176	198	22	6.46
	CSR336	172	175	3	1.53
	CSR337	199	200	1	1.52

Additional results of this drilling campaign are still awaited.

Note for editors:

Shanta Gold is a Tanzanian focussed gold explorer and mine developer. It currently has defined ore resources on the Chunya, Singida and Mgusu projects and holds exploration licences over a number of additional properties. The New Luika Gold Mine on the Chunya project is currently under construction and is anticipated to produce gold in the final quarter of 2011 The Company is admitted to trading on AIM and has approximately 180 million shares in issue.

For further information:

Shanta Gold Limited http://www.shantagold.com

Walton Imrie
Mobile: [phone]

Gareth Taylor
Mobile: [phone]

Fairfax I.S. PLC
Nominated Adviser and Broker
Ewan Leggat/Laura Littley
[phone]

Tavistock Communications
Emily Fenton/Ed Portman
[phone]

Russell & Associates
Charmane Russll/Marion Brower/Pam Wolstenholme
+ 27 11 880 3924

Qualified Person:

Braam (J.A.C.) Jankowitz, M.Sc., Pr.Nat.Sci. (400127/93), Shanta's Technical Services Manager is a qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies, June 2009, of the London Stock Exchange, and has reviewed and approved the technical information contained in this announcement.

Glossary

Internal dilution: that portion of a drilled intersection or sampled channel  included in a mineralised envelope, that does not return economically viable gold grade, but may still be regarded as part of the mineable mineralised package. The specific definition of internal dilution may vary depending on the mining method implemented, whether selective or bulk mining techniques.

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Source: Shanta Gold Limited via Thomson Reuters ONE

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