TIDMSGZ
RNS Number : 2865N
Scotgold Resources Ltd
29 January 2021
29 January 2021
Scotgold Resources Limited
("Scotgold" or the "Company)
Cononish Ramp Up Progress and Exploration Update
Scotgold Resources Limited (AIM: SGZ), the gold exploration and
production company focused on Scotland, is pleased to provide and
update on its progress ramping up production at its newly
commissioned Cononish Gold and Silver Mine in Scotland, ("Cononish
Mine"), as well as its exploration activities on the Cononish
Project, ("Cononish") and Grampian Project, ("Grampian"). The
Company's ongoing exploration programme is focused on increasing
the Mineral Resources in the area around the Cononish Gold and
Silver Mine where first gold pour was achieved on 30 November 2020,
further delineating existing prospects, and making new
discoveries.
References to figures and maps in this announcement can be
viewed in the PDF version available via the following link:
http://www.rns-pdf.londonstockexchange.com/rns/2865N_1-2021-1-28.pdf
Highlights
Production
-- Tonnage throughput for January was negligible as multiple
materials handling issues between circuits were identified but
which to a large extent have now been addressed.
-- Remaining issues restricting throughput are expected to be addressed by end Feb 2021.
-- The build up of plant operating labour in January was also
slower than planned, as recruitment was impacted by both the
Christmas period and Government imposed Covid 19 restrictions.
-- All major processing components have operated at or above
design capacity, and the plant is therefore still expected to reach
the full designed production rate of 3,000t per month.
-- As a result of the lost production during this ramp up
period, the Company is reducing its production guidance for 2021
from 9,910oz Au as announced in December 2020, to between 8,700oz
Au and 7,800oz Au from between 31,500t and 28,400t ore
processed.
Exploration
-- Recent exploration work undertaken across the Company's
option areas over the Dalradian Belt has been centred on:
o extending the soil sampling grid over Cononish and the Beinn
Udlaidh and Inverchorachan prospects, which lie within the Glen
Orchy Central and Inverliever East option areas respectively
o applying the Ionic Leach(1) method both to stream sediment and
soil sampling programmes across the Company's option areas
o reprocessing of geophysical data collected in 2018 and
2019
-- Recent activity has resulted in the identification of
additional targets and provided persuasive evidence for the
presence of mineralised veins structures
-- Three prospective areas, close to Cononish Mine, have been
identified as high priority target areas and data modelling is in
progress to establish the best sites to test these targets in any
potential future exploration drill programmes.
Richard Gray, CEO commented:
"Scotgold remains in a strong position to continue our
commercial growth trajectory after achieving first gold on 30
November 2020. Despite the frustrating but resolvable materials
handling issues that arose this month, our confidence in the
ultimate performance of the mine continues to grow. The lessons
learnt, as well as opportunities identified, during this Phase 1
ramp up will be used to optimise our plans for the Phase 2
expansion in 2022.
The year ahead will also see us advance our exploration
programme, which is focused on identifying areas with the potential
to increase our Mineral Resources within reach of the Cononish
Mine, identifying potential orebodies at Beinn Udlaidh and
Inverchorachan and notably making new discoveries within the
Company's option areas. We have had encouraging results back with
further follow work planned and we look forward to keeping you
updated on our findings."
Production Update
Teething problems encountered during this ramp up period have
focussed in 3 key areas, namely crusher circuit chokes, flotation
circuit pumps and filter press controls.
The crushing circuit has been designed to handle the full Phase
2 production rate of 15tph, and short runs during commissioning
have demonstrated this is achievable. The nature of the Cononish
ore however is such that it frequently breaks into thin flat
"slabs" and at various points in the circuit where there are "pinch
point" in chutes etc., these slabs are prone to bridging and
creating blockages. A programme is now underway to modify the
identified pinch points and permanently resolve these problems.
Five Positive Displacement (PD) pumps have been installed to
move various products between to the two banks of flotation cells
which comprise the flotation circuit. It was identified during
commissioning that some of the pumps were under sized and this
resulted in significant spillage. More recently it has also become
evident that this type of pump suffers from extremely high wear
rates with the Cononish mine material. A trial using a vertical
spindle pump previously used on the Bulk Processing Trial plant has
shown that this is the appropriate pump for this application, and a
programme is now underway to source and replace all the remaining
PD pumps.
Lastly, the filter press circuits (tailings and concentrate)
which have complex automated cycles, suffered from numerous control
system problems during commissioning. These have now largely been
resolved by the suppliers and their agents and more minor materials
flow issues are being addressed on an ongoing basis by our
operations team.
Exploration Update
Since the last exploration update of 28 September 2020, Scotgold
geologists have continued to utilise the Ionic Leach(1) method as
further detailed in the Company's RNS of 1 April 2019, both to
stream sediment sampling and soil sampling programmes across its
option areas.
Subsequent exploration work has been focused on extending the
soil sampling grid at Cononish as well as extensions to the soil
sampling grids over Beinn Udlaidh and Inverchorachan prospects
which lie within the Glen Orchy Central and Inverliever East option
areas respectively.
Additionally, geophysical data collected in 2018 and 2019 has
been reprocessed, this includes magnetics, Induced polarisation
dipole-dipole (IP) and historic Very Low Frequency (VLF).
Regional Ionic Leach Stream Sediment Sampling Programme:
A total of 625 samples have now been collected as part of the
regional stream sediment sampling programme. Samples have been
collected from 10 of the 13 option areas, with encouraging results
returned over several drainage catchments effectively identifying
targets for further follow-up (Figure 1). Sampling is ongoing as
well as follow up mapping in areas identified as anomalous (gold
values in excess of the 90(th) percentile, >1.8 ppb)
Ionic Leach Soil Sampling Programmes:
Cononish: A further 174 samples have been collected to the north
west of the existing Cononish grid (Newly sampled area 1), linking
it with the Coire Nan Sionnach grid, to further define the two gold
anomalies on the corners of the grid, (Figure 2). Open-ended NE-SW
trending gold anomalies at the southwestern extent of the Kilbridge
grid were tested by an additional 108 samples that confirm the
anomalous gold trend (Newly sampled area 2). Further sampling is
planned in the 2021 field season to further define the extent of
these NE-SW trending anomalies on the northwestern edge of the
Kilbridge grid), southwestern edge of the Coire Nan Sionnach grid
(Planned sampling 1) and northeastern extensions of the Cononish
grid (Planned sampling 2).
Beinn Udlaidh: Work previously reported on 28 September 2020 at
the Beinn Udlaidh prospect identified multiple open-ended anomalies
on all sides of the grid (Figure 3). In order to better evaluate
the extent, dispersion and distribution of these anomalies, grid
extensions were completed in 2020 and 466 samples were collected,
(Newly sampled areas 1 to 4). The northeastern extension has
highlighted an anomalous area interpreted to be associated with a
NE-SW trending fault that extends into the Coire Ghamhnain. The
anomaly in the south-western part of the grid is now seen to extend
a further 500m to the SW and will require further extension of the
grid to define this anomaly. The area to the south-east, where two
highly anomalous areas were previously reported, are shown to be
linked by a weaker gold and silver anomaly by most recent
sampling.
The continuation and open-ended nature of all of these anomalous
results requires that the company continues to define these gold
trends to better understand their significance and identify the
associated structures. Further soil sampling is planned over the
four areas outlined (located in Figure 3 below) during the 2021
field season.
Inverchorachan: Work previously reported on the 28 September
2020 at the Inverchorachan prospect has been extended to the north
east (Figure 4). Results are reported for a total of 100 soil
samples which indicate a weak or possibly plunging gold trend
extenting to the north east, along strike with the Tyndrum fault.
Further work is planned to the south west to investigate the
currently unconstrained anomaly in this part of the grid as well as
delineate the source of the anomalous areas defined by previous
stream sediment sampling in the area.
Geophysical Surveys
Scotgold conducted an orientation survey over the Cononish area
using induced polarisation dipole-dipole (IP) and magnetic
techniques in 2018, this survey was extended in 2019 to cover areas
identified as anomalous by geochemical sampling.
Processing of this data, along with reprocessing of historically
collected VLF data has helped to delineate possible subsurface
structures in proximity to the Cononish deposit (Figure 5). No
clearly definable magnetic signature is seen over Cononish, however
complex resistivity anomalies appear to be associated with the
Cononish vein as well as a subtle IP anomaly. The VLF data appears
to most effectively outline the Cononish Vein and Mother Vein
structures (figure 4).
The Mother vein, to the south east of the Cononish Vein, has a
clear magnetic response as well as a clear IP and resistivity
signature. To the SW of the study area, the IP and resistivity
anomalies broaden and bifurcate, suggesting a secondary structure
possibly associated with the Mother Vein.
The correlation between subtle but anomalous surface geochemical
distributions combined with the geophysical data, especially the
VLF together with the IP/RES data, and recent structural
interpretation, provides persuasive evidence for the presence of
mineralised veins structures under till deposits to the west of the
Barren Vein (location 1 and 2) and to the south of the Cononish
Vein (location 3). The company is currently engaged in modelling
the geochemical, geophysical and structural data to establish the
sites to test these three targets. Once modelling has been
completed an exploration and drilling programme will be budgeted
and scheduled.
(1) Ionic Leach(TM) is a static sodium cyanide leach using the
chelating agents ammonium chloride, citric acid and
Ethylenediaminetetraacetic acid ('EDTA') with the leachate buffered
at an alkaline pH (pH 8.5). Samples are digested as collected so
there is very little opportunity to lose or introduce elements
during the partial leach process. This innovative leach technique
is designed for near surface soil samples. It is designed to
improve geochemical mapping and enhance the potential to detect and
resolve geochemical anomalies for a range of commodity
elements.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
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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END
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