TIDMSGZ
RNS Number : 7103B
Scotgold Resources Ltd
12 October 2020
12 October 2020
Scotgold Resources Limited
("Scotgold" or the "Company)
GBP 3 m raised to accelerate doubling of production at the
Cononish Gold & Silver Mine and to increase exploration
activities in 2021
Scotgold Resources Limited (AIM:SGZ), the gold exploration and
production company focused on Scotland, is pleased to announce that
it has raised GBP3 million before expenses by way of a placing of
2,727,273 depositary interests of no par value in the Company ("New
Ordinary Shares") at a price of 110p per New Ordinary Share (the
"Placing"). The proceeds of the Placing will be used to accelerate
plans to double production at the Cononish Gold & Silver Mine,
("Cononish") which is on course to become Scotland's first
commercial gold mine by 30 November 2020. Funds will also be used
to increase exploration activities, rolling out Scotgold's
systematic programmes across its 2,900km(2) licence portfolio in
the Grampian Terrane of Scotland.
SP Angel Corporate Finance LLP acted as sole broker to the
Placing.
Overview
The Company will use the net proceeds of the Placing to:
-- Accelerate Phase 2 development of the Cononish Gold &
Silver Mine which will involve a 100% increase in production to
72,000 tonnes of ore produced per annum:
o Average annual gold equivalent production during Phase 2 will
rise to 23,500 ounces from 9,910oz during Phase 1
o Phase 2 production to commence by May 2022 - 11 months earlier
than previously scheduled and 17 months after the initial gold pour
in November 2020
o Recalculated model using the accelerated Phase 2 development
strategy and gold and silver prices of GBP1,400/oz and GBP19.23/oz
respectively deliver highly attractive Life of Mine ('LOM')
economics:
-- GBP178 million EBITDA;
-- GBP156 million pre-tax Cash Flow;
-- GBP127 million Net Cash Flow; and
-- GBP96 million Pre-tax NPV (discount rate of 8%)
-- Fund the Company's systematic exploration work across its
exploration licences which cover 2,900km(2) of the Dalradian Belt
in Scotland:
o Highly prospective mineralised footprint which the Board
believes could increase mineable ounces at the Cononish mine and
also support potential new mines of Cononish scale or larger
o Encouraging recent results include the identification of gold
and silver anomalies to the north east of the Cononish mine and
from the Beinn Udlaidh and Inverchorachan prospects
CEO, Richard Gray, commented:
"We have an exceptionally exciting few weeks ahead of us as we
make final preparations for our first gold pour at Cononish by 30
November. As we ramp up production thereafter, the funds raised
today will allow us to commit to the expenditures required to build
on this anticipated momentum and accelerate the Phase 2 expansion
project, whilst at the same time maintaining prudent cash reserves.
With this strong cash balance in place, we have a clear path to
realising the significant value that we believe Cononish and our
additional prospects offer to investors."
Cononish Project re-estimation of key financial metrics (at
GBP1,400 per ounce)
Project Returns: October 2020 to end of LOM
Gold price GBP/oz 1,400
---------- --------------
Silver price GBP/oz 19.23
---------- --------------
EBITDA GBP 177,893,130
---------- --------------
Pre-tax Cash Flow GBP 155,593,371
---------- --------------
Net Cash Flow GBP 127,502,037
---------- --------------
NPV calculation date 1 Oct 2020
---------- --------------
Pre-tax NPV @ discount rate
of 8% GBP 96,240,337
---------- --------------
Operating Margin % 68.7
---------- --------------
Average all in sustaining cost GBP 461.24/oz
(AISC)
---------- --------------
Cononish Project Development update
Plant construction continues on schedule; with the building
structure now complete and work continuing on the installation and
connections of pumps, drives, piping and electrics and ultimately
commissioning. First gold is scheduled to occur by 30 November
2020.
Application for admission
Application will be made for the 2,727,273 New Ordinary Shares
to be admitted to trading on AIM ("Admission") and Admission is
expected to take place on or around 15 October 2020.
Following Admission, the Company's enlarged issued share capital
will comprise of 54,079,006 ordinary shares of no par value with
voting rights. The Company does not hold any shares in treasury,
therefore the total number of shares in the Company with voting
rights will be 54,079,006. This figure may be used by shareholders
in the Company as the denominator for the calculations by which
they will determine if they are required to notify their interest
in, or a change in their interest in, the share capital of the
Company.
Director Shareholdings on Admission
Director Current Current Shareholding Resultant % shareholding
Shareholding % Shareholding on Admission on Admission
Mr Nat le Roux 22,618,223 44.05% 22,618,223 41.82%
-------------- ---------------- -------------- -------------------------
Mr William Styslinger 5,931,400 11.55% 5,931,400 10.97%
-------------- ---------------- -------------- -------------------------
Mr Peter Hetherington 4,088,961 7.96% 4,088,961 7.56%
-------------- ---------------- -------------- -------------------------
Investor Presentation
An new corporate presentation for Scotgold will be available
today at the following address:
https://www.scotgoldresources.com/about-us/company-presentations/
.
Further details of the Life of Mine Plan
Further details of the cost dynamics and capital costs and
sources of funding are set out in the tables below.
Cost Dynamics: Project Lifetime
Capital Cost GBP 34,012,963*
------- --------------
Operating Cost GBP 81,196,935
------- --------------
Average Operating Cost/oz Eq
Au. GBP 439.17
------- --------------
Average Capital Cost/oz Eq
Au. GBP 183.97
------- --------------
Total Average Cost/oz Eq Au. GBP 623.14
------- --------------
* Includes asset based finance costs
Phase 2 Production Build-Up Capital cost
Mine development GBP 563,182
------- ------------
Mining equipment GBP 1,040,792
------- ------------
Processing plant GBP 2,887,409
------- ------------
Tailings facility GBP 144,800
------- ------------
Environmental & Social GBP 275,000
------- ------------
Mains electricity supply project GBP 1,700,000
------- ------------
Total Phase 2 Capital Cost GBP 6,611,183
------- ------------
Funded by:
Asset-based financing GBP 956,350
------- ------------
Equity funding GBP 2,500,000
------- ------------
Internal generation of funds GBP 3,154,833
------- ------------
Total GBP 6,611,183
------- ------------
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
**ENDS**
For further information please contact:
Scotgold Resources Limited Tel: +44 (0)1838 400
Richard Gray 306
SP Angel Corporate Finance Tel +44 (0) 20 3470
LLP 0470
Nomad and Broker
Ewan Leggat / Charlie
Bouverat
Tel +44 (0) 20 7236
St Brides Partners 1177
Financial PR
Susie Geliher / Frank
Buhagiar
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