Karen Peattie
SCOTLAND’S first commercial gold producer, Scotgold Resources, has revealed half-year losses of A$9.5 million (£5.2m) just days after admitting it had “significant doubt” over its ability to continue as a going concern.
The company behind the Cononish gold and silver mine near Tyndrum in Argyll, in its interim results for the six months ended December 31, 2022, saw total revenues rise from A$6.4m to A$9.5m during the period. It also made its first Scottish gold doré sales, totalling £25,420, to jewellery firms in December.
Chairman Peter Hetherington, describing the period as “challenging”, was upbeat about the progress and “important milestones” being achieved at Cononish “as we continue to develop Scotland’s first commercial gold mine towards full production, producing both gold concentrate for off-take and Scottish gold doré for the jewellery industry”.
He noted: “We implemented initiatives for the underground mining operation and processing plant to enable our operation to run more efficiently.”
Production for the three months ended September 30, 2022, totalled 2,004 ounces of gold, although this was lower than the 2,600 to 3,200 ounces targeted for the quarter as a result of the “successful but delayed power and ventilation upgrades in the underground mine, which stalled mine development on the waste ramp in September”.
While further operational difficulties continued in the underground mine during that three-month period, December saw harsher-than-expected weather conditions which also had a negative impact.
Earlier this week, Scotgold said that the 5,818 tonnes of mineralised ore it planned to mine in February and March before its transition to transition to long-hole stoping was now expected to be between 550 and 600 in March. It had experienced difficulties as work progressed on the 430 West ore drive in late February and early March, when “gold grades began to decline significantly”.
It also revealed that it raised £3 million in February through a share placing, subscription and retail offer to support the delivery of its 2023 mine plan and its planned transition from tunnel development to long-hole stoping, as well as its exploratory drill programme.
Further to the capital raising, Bridge Barn Limited, a company owned and controlled by Nathaniel le Roux and provider of debt funding to the Scotland, has agreed to defer a total of £2.5m capital repayments due by the firm in 2023 by up to nine months.
Mr Hetherington added that the firm’s management team continued to assess Scotgold’s cash position. He said: “In order to safeguard against this potential shortfall in working capital over the next few months, the directors have determined to take steps to strengthen the company’s cash position.
“The company is in advanced discussions with its gold off-take partner, and is reviewing final documentation, to secure a US$500,000 advance to assist with short-term working capital. The directors have also discussed, if the need arises, the provision of additional working capital, in the form of equity or a short-term convertible loan.
“The ability of the consolidated entity to continue as a going concern over the long term will remain dependent on the quantity and grade of ore mined and processed being within a reasonable tolerance of the forecast quantity and grade and adherence to the planned product shipment schedule.”
Scotgold, which currently has 96 employees, has been working with Forth Valley College in Falkirk on apprenticeship schemes and has placed students in mechanical engineering roles. In addition, last summer it launched a partnership with the University of St Andrews for a five-year student bursary programme.
“Our team is working closely with the university teaching staff and students on the MSc Strategic Resources course involving work at both the university and at our Cononish site,” noted Mr Hetherington.
“We also support work of Loch Lomond & The Trossachs National Park and contribute to the Strathfillan Development Trust, which is a local charity representing the residents of Tyndrum, Crianlarich and Inverarnan.”
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