REG - Scotgold Resources - Operations and Corporate Update

Scotgold ResourcesAnnouncement

27/03/2023 07:00

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RNS Number : 2338U  Scotgold Resources Ltd  27 March 2023

27 March 2023

 

Scotgold Resources Limited ("Scotgold" or the "Company")

Operational and Corporate Update

Notice of Results

 

Scotgold Resources Limited (AIM: SGZ), Scotland's first commercial gold
producer, announces an operational and corporate update for its Cononish Gold
and Silver Mine in Scotland ("Cononish").

 

As announced on 19 January 2023, the Company outlined its 2023 mine operations
plan. The mine operations plan was based off the most recent grade control
model and included limited resource definition drilling information undertaken
in 2022. Central to the 2023 mine operations plan was the   transition from
ore extracted via level development and cut and fill stoping to long hole
stoping (planned for Q2 2023), as per the original long-term mining plan for
the Cononish Mine. Long hole stope mining is a widely used mining method in
underground mining that supports cost effective and efficient extraction of
ore.

 

In January 2023 mine development focussed on the 430 West ore drive, 415 East
ore drive and the incline ramp accessing the 445 level. January's development
rates continued to improve and was a record month with 3,003 tonnes of ore
mined, and 2,620 tonnes of ore fed to the process plant. Average grade of the
ore processed was lower than predicted (5.65g/t actual vs 7.35g/t planned of
gold).

 

In February 2023, development on the 430 West ore drive continued on ore for
an additional 35 metres beyond design increasing the strike length of the
stoping panel above CAF 1 by 45 metres, with the total panel now 115m in
length. Per the 2023 mine operations plan, the 430 West ore drive was expected
to deliver ore continuously as it progressed towards and on top of CAF2 as
this CAF area previously provided high gold grades above 10-12g/t in 2022.
However, as the 430 West ore drive progressed in late February and into early
March 2023, gold grades began to decline significantly, and the 430 West ore
drive turned to waste, contradicting the grade control model. Total ore
production in February was negatively impacted, with actual 977 tonnes mined
and 1,441 tonnes processed.

 

As a result of the 430 West ore drive turning to waste and the need to focus
on ore production, the Company shifted development priorities on 3 March 2023
to the 415 East ore drive. In parallel, plans commenced to bring forward long
hole stoping to early April to secure the short to medium term production
profile and enhance gold production thereafter.

 

Implications of the ore tonnage mined in February and March 2023

 

On 9 February 2023, the Company undertook an equity fundraise to provide funds
to support the planned transition from tunnel development mining to long hole
stoping. The Company's mine plan anticipated that 5,818 tonnes of mineralised
ore would be mined in February and March ahead of the transition to long-hole
stoping in Q2 2023. As detailed above, actual tonnes mines are now expected to
be between 550 and 600 in March and about 3,000 tonnes of waste to place into
required areas for commencement of stope drilling.

 

The Company's management team continuously assess the cash position of the
Company. As a result of recent mining performance being below plan, largely
due to lower than expected grades in the 430 West ore drive resulting in the
subsequent decision to bring forward long hole stope mining, the Directors now
believe that, in the event that the planned commencement of long hole stoping
in April is  delayed, or the anticipated tonnes of ore mined in April and the
following months is significantly below the current mine plan, then a material
uncertainty would exist that casts significant doubt over the ability of the
consolidated entity to continue as a going concern in the very immediate term
and therefore its ability to realise its assets and discharge its liabilities
in the normal course of business.

 

In order to safeguard against this potential shortfall in working capital over
the next few months the Directors have determined to take steps to strengthen
the Company's cash position. The Company is in advanced discussions with its
gold offtake partner to secure a US$500,000 advance to assist with short-term
working capital. The Directors of the Company have also discussed, if the need
arises, providing a short-term convertible loan as a measure to ensure the
Company continues with the long hole stoping deliverables as updated in this
release.

 

The ability of the consolidated entity 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 planned product shipment schedule.

 

Preparation works for long hole stoping - March 2023

 

Preparation works commenced in March 2023 to start long hole stope mining in
the eastern section of the 430 West ore Drive over an initial stoping length
of 115m (Figure 1). Key works included level preparation, detailed stope
design, drilling markup, development of safe working procedures, induction,
training and supporting, toolbox topics and communications. The Company is
pleased to note that a development milestone was achieved, as long hole stope
drilling commenced in the first stope panel during the week of 20 March
2023.  Long hole stope mining is on track to commence in 8 days time with
first blasting.

 

Mining will also continue on the 445 incline ramp to ensure access to the 445
level and establish further development drives in areas where the original
resource and grade control models support high confidence mineralisation
(Figure 3). This area is also being designed and rescheduled to support
continuous long hole stoping being achieved in the later part of 2023 as per
the 2023 mine plan announced previously with the aim of achieving full phase
production by Q4 2023. See Figures 1, 2 and 3 which illustrate an overview of
the mine development and long hole stoping activities commencing this month.

 

Figure 1:  Mining development and March 2023 stoping plan

 

 

 

 

 

 

 

 

 

 

 

Figure 2: March stope mining plan grades in 430 West eastern section (115m
stoping length) for April - July 2023 and thereafter.

 

 

 

 

 

 

 

 

 

 

 

Figure 3: Resource model drilling and mine plan - 445 level planned stoping
area for late 2023 (black lines denote original resource programme drill holes
which demonstrated robust gold grades in the 445 East drive).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Operations Performance Development in January and February 2023

                                 Jan 23  Feb 23
 Ore tonnes mined                3003    977
 Ore Grade (Au g/t) mined        5.65    4.00
 Waste tonnes mined              2720    1375
 Total tonnes mined              5723    2352
 Total metres mined              158     73
 Total Oz mined                  545     126
 Total Ore fed to process plant  2620    1441

 

Further Corporate updates

 

In addition, the Company has become aware that the email accounts of the
executive directors have been accessed by unauthorised persons and specious
emails sent in their names to numerous people. Whilst we believe the
vulnerability has been fixed it is impossible to ever be certain of this. The
police have also been informed on this matter and will continue to
investigate.

 

The Company can also confirm that there have been no serious health and safety
incidents this year. We work in accordance to the UK's HSC best practice and
have a zero-harm safety culture focused on continuous improvement to achieve
an injury free and healthy work environment.

 

Notice of Results

 

The Company will announce its interim results for the six months ended 31
December 2022 on Thursday 30 March 2023.

 

**ENDS**

 

For further information please visit www.scotgoldresources.com
(http://www.scotgoldresources.com) or contact the following:

 

 Scotgold Resources Limited    Shore Capital             Celicourt Communications

 Chief Executive Officer       Nomad and Broker          Financial PR

 Phil Day                      Toby Gibbs / John More    Felicity Winkles/Ariana Fanning

 CFO

 Sean Duffy
 Via Celicourt Communications  Tel +44 (0) 20 7408 4090  Tel +44 (0) 208 434 2643

                                                         Tel +44 (0) 774 8843 871

 

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
planned +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.
The mine has anticipated forecast operating costs of c.£610 per ounce in Q4
2023, which will place Cononish in the lowest quartile of gold mining
operations globally.

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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