TIDMSGZ
RNS Number : 9930L
Scotgold Resources Ltd
11 September 2023
THIS ANNOUNCEMENT RELATES TO THE DISCLOSURE OF INFORMATION THAT
QUALIFIED OR MAY HAVE QUALIFIED AS 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.
11 September 2023
Scotgold Resources Limited ("Scotgold", the "Company" or the
"Group")
Geological review, mine plan and operations/production
update
Suspension of trading on AIM
On 10 July 2023, the Company announced that, among other things,
it was undertaking a third-party review of the Cononish mine plan
for the next twelve months, encompassing a geological review of the
Cononish Mine mineral resource estimate ("MRE") and grade control
("GC") process, mine design, schedule and production forecasts.
Initial findings have been fed back to the Board.
As announced on 10 July 2023, H1 2023 was disappointing in terms
of gold production and development of the underground mine at
Cononish. The ability of the Group to continue as a going concern
over the long term would 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.
While the Geological data and documentation suggested 'no fatal
flaws' in the MRE and GC modelling process, the draft mine plan and
associated cash flow forecasts are currently being reviewed by the
Company, but they indicate that to deliver to the plan, a
significant capital investment is required. The Company is actively
seeking additional financing and discussions are in an advanced
stage and, should they materialise, are expected to provide
sufficient funding for the Company to continue as a going concern.
The outcome of the funding discussions is highly uncertain and if
the Company cannot conclude a significant fundraise, it will cast
material uncertainty for the Company to continue as a going
concern.
T he Company has been managing its creditors including debt
providers. Debt providers have not been paid interest as it has
fallen due, but they have agreed to payment plans and as such to
date there have been no events of default. One unsecured creditor
has (recently) demanded full payment of outstanding interest, and
although the Company has sufficient funds to make this payment, it
does not believe that to do so would be in the best interest of all
stakeholders. As such an event of default is possible if such
creditor does not agree to a new payment plan. In the event of
default there is a material risk the business could be placed into
administration in the next few weeks.
The Board therefore continues to explore its options and pending
clarification of its financial position, trading in the Company's
shares on AIM will be suspended with effect from 7.30 a.m. on 11
September 2023. Notwithstanding the suspension of trading in the
Company's shares, the Company will continue to make announcements
as and when there are any developments that require announcement in
accordance with its obligations under the AIM Rules.
Forward Mine Planning
A mine plan until July 2025 has been received and is under
internal review. This plan supports the use of long hole open stope
mining ("LHS"). The cash flow implications of this plan are also
under review. Even though the plan is under review it is clear that
Cononish needs significant new funding in order to increase ore
production to a level which would achieve sustained profitability.
The underground work envisaged includes significant development, a
drilling programme and further upgrades to power and
ventilation.
The suspension of mining on the 430 OD due to lower than
expected grade combined with the current level of power available
underground, and associated ventilation has restricted the rate of
mining below the level envisaged in the mine plan presented in
January 2023, with a knock-on effect of delivery of less
mineralised ore to the plant than planned. Further work is required
before the Company can present new production guidance.
Operations and Production update
LHS mining commenced on 5 April 2023 with gold concentrate
production steadily increasing 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. LHS and production continue to perform well and in line
with management's expectations.
In July 2023, stope block 2 was backfilled, 2,561 tonnes of ore
were delivered to the ROM pad for processing at an average grade of
13.0g/t. 2,455 ore tonnes were processed at an average grade of
13.2g/t, with 1,033 ounces of gold produced for the month.
In August 2023, drilling and production blasting of stope block
3 (planned to be 37m) commenced and is currently 60% through with
first 5 days of assays in line with expectations. 630 tonnes were
mucked from stope block 3 with an unreconciled grade of 20g/t.
1,984 tonnes of ore were delivered to the ROM pad for processing
during August at an average grade of 10.8g/t, with 692 ounces of
gold fed through the plant (figures undergoing reconciliation).
In September 2023, the last month of Q3 2023, the Company
continues to produce from stope block 3 and develop the incline
towards the 460 level. The Company will update on Q3 2023
production in October 2023.
Sales
July and August 2023 gold concentrate shipments totalled 235
tonnes with a sales value of GBP1.9m. Scottish gold doré sales made
to Scottish jewellery companies during July and August totalled GBP
46,160.
**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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END
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