Shares in Scotgold Resources tumbled in yesterday’s trading after it reported a shortfall in fourth quarter production at its mine at Cononish in Argyll, but the company remained bullish about prospects for the coming year as it outlined plans to expand operations.

Releasing the group’s results for the year to the end of June along with a separate production update for the three months to the end of December, chief executive Phil Day said 2022 was a year of “transformative progress” as Scotgold ramped up production at Cononish. Technical problems and harsh winter conditions led Scotgold to cut its fourth quarter production guidance to 2,000 ounces of gold, down from 3,000 to 3,500 ounces previously, but the company still expects to achieve a yearly run rate of more than 23,500 ounces in 2023.

“Whilst it is disappointing to report that Q4 2022 production guidance will be missed, I am firm in my belief that it is not material in terms of near-term development of Cononish and realising Phase 2/full production in 2023 as planned,” Mr Day said.

“As outlined in our final results and annual report, transformational progress has been made over the past year and I look forward to 2023 and reporting on our progress at Cononish as an exceptionally high-grade, low-cost, cash-generative operation.”

READ MORE: Scotgold revises down gold production guidance

Scotgold holds 13 licences covering 2,900 square kilometres of the Dalradian Belt across the Grampian Mountain range, and believes the geology “points to further exceptionally high-grade deposits” like Cononish.

Its longer-term vision is to explore these areas with the aim of developing additional gold and silver mines in Scotland. The company is already undertaking very low frequency resolution magnetics to establish a 2023 resource drilling campaign.

AIM-quoted Scotgold, which reports its financial results in Australian dollars, saw a surge in revenues to nearly £10 million during the 12 months to the end of June, up from £168,000 previously. However, pre-tax losses more than doubled to £6.05m from £2.8m the year before.

The company has more than trebled its headcount to 96, of which 51 are based in Scotland.

“In line with our vision to build a multi-asset gold production company, we will continue to increase our headcount during 2023 and beyond, through apprenticeships, internships, and student bursaries such as ours with the University of St Andrews, to become the employer of choice in the region,” said Mr Day, who joined Scotgold in April of last year.

READ MORE: Scotgold Cononish to hit rate over 20,000 ounces

Scotgold claims to be the first commercial gold producer in both Scotland and the UK. It poured its first gold in November 2020 at Cononish.

The mine currently has an expected production lifespan of eight and a half years, but Mr Day said management believes there is potential for this to be “substantially increased within the immediate Cononish mining area”.

“Whilst we anticipate significant cash generation, especially once full production is achieved during 2023, we are committed to continuing to grow and realise Cononish and Scotgold’s value through exploration,” he added.

Founded as an Australian company in 2007, shares in Scotgold were admitted to London’s junior Alternative Investment Market (AIM) in 2010 following an increase in interest from British investors after initial drilling success at Cononish.

Its shares closed yesterday’s trading more than 11 per cent lower, down 6.5p at 52.5p. In June of this year they traded as high as 85.6p