TIDMSGZ
RNS Number : 4192F
Scotgold Resources Ltd
10 July 2023
10 July 2023
Scotgold Resources Limited ("Scotgold", the "Company" or the
"Group")
Production, Sales, and Operations Update - Q2 2023 and H1
2023
Scotgold Resources Limited (AIM: SGZ), Scotland's first
commercial gold producer, provides its calendar year Q2 and H1 2023
results for the three months and six months ended 30 June 2023 from
its Cononish Gold and Silver Mine in Scotland ("Cononish").
Operational and Production Review
On 19 January 2023, the Company outlined its 2023 mine
operations plan. This plan was based on its then current grade
control model and included limited resource definition drilling
information undertaken in 2022. Central to the 2023 mine operations
plan was the transition to long hole open stoping ('LHS').
As announced on 27 March 2023, the 430 West Ore drive
development was halted in late February due to declining gold
grades. As a result, the Company shifted the mine development
priorities on 3 March 2023 to the 415 East ore drive. In parallel,
plans commenced to bring forward LHS to begin early April to secure
the short to medium term production profile at Cononish.
LHS commenced 5 April 2023 and has been progressing in line with
the LHS plan. To date, 50m (2 stoping blocks) of the 115m strike
length has been completed with 2,906 tonnes of ore being delivered
to the ROM pad for processing since LHS began. Stoping block 2,
which produced 950 tonnes of ore at an average gold grade of
11.6g/t, was above forecast grades for block 2 of 10.4g/t of
gold.
As a result of the 430 West Ore drive development being halted,
production for Q1 2023 (1 January to 31 March 2023) was severely
impacted, totalling 758 ounces of gold for the period.
With the commencement of LHS on 5 April 2023, gold concentrate
production steadily increased in Q2 2023, with a total of 1,556
ounces of gold being produced, of which 818 ounces was attributed
to June 2023. For H1 2023 total gold production totalled 2,314
ounces.
Sales
Q2 2023 gold concentrate shipments totalled 269 tonnes with a
sales value of GBP2.0m and H1 2023 gold concentrate shipments
totalled 437 tonnes with a sales value of GBP3.5m.
Scottish gold doré sales made to Scottish jewellery companies
during H1 2023 totalled GBP183,478.
Table 1: The following table summarises quarterly gold
production and sales at Cononish on a calendar year basis:
Gold produced Gold Sales Gold sales Gold sales
(ounces) (ounces) price (GBP million)
(GBP/ounce)
2022 8,564 7,502 1,586 11.9
======== ============== =========== ============= ===============
Q1 2023 758 932 1,622 1.5
Q2 2023 1,556 1,213 1,609 2.0
======== ============== =========== ============= ===============
H1 2023 2,314 2,145 1,614 3.5
======== ============== =========== ============= ===============
Mine Planning
After reconciling mine development and production over the past
six months, including investigating the issues and impact of
stopping the 430 West Ore drive development in late February 2023,
the Company is undertaking a third-party review of the Cononish
mine plan for the next twelve months.
The review will initially encompass an assessment of the mine
design, schedule and production forecasts. This review will inform
2023 production forecasts and will also incorporate a second stage
of power and ventilation upgrades to improve mine accessibility and
enable the mine to operate all development and production equipment
simultaneously to improve mine development rates. This second stage
of power and ventilation upgrade allows a step change in
development rates and opens up more mining fronts by enabling
equipment to operate in parallel. This is necessary to complete the
capital development required for ventilation, resource definition
drilling and continuation of the incline to open up more mining
fronts.
The Company is withdrawing its 2023 production guidance and will
update the market on production forecasts and its mine plan, once
the third-party review is completed, and findings have been
analysed.
Processing Plant
In line with optimisation initiatives undertaken in 2022, the
processing plant continues to perform in in line with expectations.
Mill feed averaged 8.1g/t of gold for Q2 2023 and 6.9g/t in H1
2023. Processing plant gold recovery levels were above 94% for Q2
2023 and 94% in H1 2023. In June 2023 the processing plant
processed 2,538 dry metric tonnes of ore and had 519 hours run time
for the month.
An upgraded, fully automated gravity circuit is being
commissioned to increase Scottish Gold doré production on site. The
circuit is expected to be fully commissioned Q3 2023.
As previously announced the tailings thickener, designed to
increase throughput of ore, is ready to be commissioned. The
Company will commission the tailings thickener when sufficient ore
is being delivered from the mine for it to be effective.
Financing
GBP5.0 million was raised during H1 2023 to support delivery of
the Company's 2023 mine plan, to procure a definition drill rig,
and for additional working capital, as Cononish continues to be
developed towards full production. The Company has identified a
definition drill rig whilst alternative drill rigs are being
considered due to the definition drilling program being on hold
until the completion of the 3(rd) party mine plan review.
The Group held GBP620k of cash as at 30 June. The $500k advance
received from MRI remains outstanding, with the first repayment of
$100k scheduled to be deducted from the next shipment on 11 July
2023. The ability of the Group 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 previously planned
product shipment schedule. This schedule is being reviewed as part
of the third-party review of the mine plan commissioned by the
Company.
Scotgold Resources Interim CEO, Sean Duffy said: "H1 2023 has
been disappointing in terms of gold production and development of
the underground mine at Cononish. The impact of the declining of
gold grades in the 430 West Drive, late February was significant
and evident in the resultant production figures for the period.
Notwithstanding these difficulties, LHS has progressed in line with
our plans and I want to thank our dedicated team for working safely
and tirelessly to deliver this, with Q2 2023 production being
steady and increasing as a result.
"We have begun a mine plan review following reconciling
Cononish's mine development and production over the past six
months. This review will allow us to recalibrate our current 2023
mine plan to best optimise LHS going forward as we continue to
develop the mine with a view to achieving full production in the
long-term."
**ENDS**
Scotgold Resources Limited Via Celicourt Communications
Sean Duffy, interim CEO and CFO
Peter Hetherington, Non-executive Chairman
Shore Capital (Nomad and Broker) Tel +44 (0) 20 7408
Toby Gibbs / Tom Knibbs 4090
Celicourt Communications (Financial Tel +44 (0) 774 8843
PR) 871
Felicity Winkles
Notes
Scotgold Resources Ltd (AIM:SGZ), is Scotland's first commercial
gold producer. The Company poured first gold in November 2020 at
its Cononish Gold and Silver Mine ('Cononish) in Tyndrum, Scotland
and is developing it into a +23,500-ounce gold mine per annum.
Cononish is a high-grade underground mining operation with a
central processing plant producing gold concentrate for off-take
and gold doré for the Scottish Jewellery industry.
It is Scotgold's vision to build a mid-tier gold mining company
in Scotland with multiple operations in the country that enhance
the local environment and economy in ways that have an enduring
positive impact.
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