By Scott Wright
SHARES in Scotgold Resources leapt more than four per cent after the company revealed it has made a breakthrough in the technical issues that have blighted processing work at its gold mine in Argyll.
The company declared that it has resolved the problems at the processing plant at the Cononish mine that it flagged in April. It warned then that delays in the ramping up of underground mining production would be slower than hoped, stating that the development of the mine at this stage was insufficient for it to provide optimal ore quality in the short term. Directors were forced to take steps to support its cash position.
However, Scotgold informed the City yesterday that it has resolved various outstanding technical issues that it had outlined in its statement to the market on April 27, with the company declaring Cononish is now producing both gold concentrate and gravity-separated gold Dore. It hailed the “major milestone” of making its first shipment of concentrate was made on May 11. Twenty-five tonnes of concentrate at an average of 182.4 grams per tonne of gold were shipped, exceeding the target of 150g and “achieving maximum price within the agreed terms within the offtake agreement.”
“Modest amounts of gravity gold Dore were also produced and sent to refiners this month for further treatment,” Scotgold said.
The company added: “Scotgold is encouraged with the mine and process plant performance, although performance has been intermittent to date. On given days throughout April and May both the mine and process plant have been achieving near design rates of production. The company is also pleased with the quality of ore that has been mined and produced through the process plant.”
Scotmid now plans to open multiple faces of ore in the underground mine, noting that the limited number of faces at present is constraining its “immediate ability to focus on the highest-grade ore zones of the Cononish ore body.”
New estimates for 2021 gold production will come with monthly updates the company will now provide to the market.
Scotgold replaced Richard Gray with mining veteran Phillip Day as chief executive in April. Shares closed up 2.4p at 58.9p.
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