Richard Gray, CEO commented: Overall progress on the development of Cononish is pleasing. There is a short delay in the production of first gold from our previous expectations, but a stockpile of ore will be accumulated during this period which will provide an opportunity to exceed targets later in the year.
The combination of the gold price being in excess of £1,200 per ounce and the pipeline of projects that we anticipate will result from our Grampian exploration work, bode well for the Company’s long term outlook.
Cononish Development Project Update, Fundraising and Grampian Project Exploration Update
Scotgold Resources Limited (AIM:SGZ) provides an update to the development of the Cononish Gold and Silver Mine (the “Cononish Project”) with an associated equity and debt fundraising of £2.65m, revised Life of Mine key financial metrics based on a gold price of £1,200/oz and an update to exploration activities on the Grampian Project.
· Mine development on schedule and access to ore expected by end 2019. Process plant equipment manufacture completed on schedule and currently being shipped to site.
· The process plant building and associated civil earthworks are behind schedule, principally due to civil engineering design delay. Consequently the Cononish Project schedule has been revised and first gold production is now expected end February 2020, compared to December 2019 as originally scheduled.
· The detailed Cononish design, capital and operational cost re-estimates completed indicate a revised funding requirement of an additional £2.5m. This is principally as a result of the delay identified above, Phase 2 process plant capital expenditure brought forward to Phase 1 and more costly civil earthworks requirements.
· This funding requirement has been addressed through the extension to the existing Bridge Barn Loan facility by £1.5m and the subscription of 3,285,783 depositary interests of no par value in the Company (“New Ordinary Shares”) at an issue price of 35 pence per New Ordinary Share to raise approximately £1.15 million (the “Subscription”). Over £0.95m of the Subscription has come from 3 Company directors and a member of the Company’s management team
· The Company has undertaken a re-estimation of the life of mine financial model for Cononish Project which demonstrate returns are significantly improved at a gold price of £1,200/oz with EBITDA increased from £101m to £147m
· Exploration work on the Grampian Project has identified another previously unknown anomalous zone at Cononish and an exciting new, potentially significant anomalous target area at Inverchorachan. The highest gold values detected at Inverchorachan of 124ppb compare favourably with the highest gold values recorded at Cononish of 39.9ppb using the same “Ionic Leach” technique.
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