Shanta Gold (SHG:AIM) 11.85p

Gain to date: 31.2%

We made African gold miner Shanta Gold (SHG:AIM) one of our key picks for 2023 in the expectation of higher gold prices and with the hope strong operational progress from the company could offer gains over and above those enjoyed by the precious metal.

WHAT HAS HAPPENED SINCE WE SAID TO BUY?

Both parts of our investment case have paid off. Gold prices have gone higher, with the latest leg up driven by a crisis in the banking sector. Prices recently moved above the $2,000 per ounce mark for the first time in a year as investors sought out its safe haven credentials.

For its own part Shanta remains on track for first production from its Singida project any day now and has announced positive news on reserves and resources for its Kenyan and Tanzanian assets.

Less positively, production for the fourth quarter fell short of expectations at 65,200 ounces versus the lower end of previous guidance at 68,000 ounces. Power issues and reduced availability of equipment affected the company in the final three months of 2022.

WHAT SHOULD INVESTORS DO NOW?

As the fourth quarter production miss shows, Shanta is still exposed to operational risks. With gold’s recent strength helping to lift shares well above our entry point we think it would be worth investors booking profit.

A 30%-plus return in three months is beyond our initial expectations. Therefore, it is time exit in our view. Investors looking to remain exposed to gold could consider switching into iShares Gold Producers ETF (SPGP) which we recently added to our regular Great Ideas portfolio.

This ETF tracks a diversified basket of larger gold miners meaning the risk of being tripped up by individual company failings is heavily mitigated.

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