REG - Scotgold Resources - Production, Sales & Operations – Q2 2023 & H1 2023

Scotgold ResourcesAnnouncement

10/07/2023 07:00

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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
£2.0m and H1 2023 gold concentrate shipments totalled 437 tonnes with a sales
value of £3.5m.

 

Scottish gold doré sales made to Scottish jewellery companies during H1 2023
totalled £183,478.

 

Table 1: The following table summarises quarterly gold production and sales at
Cononish on a calendar year basis:

 

 

          Gold produced  Gold Sales  Gold sales price  Gold sales

          (ounces)       (ounces)    (£/ounce)         (£ million)
 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

£5.0 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 £620k 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 4090

 Toby Gibbs / Tom Knibbs

 Celicourt Communications (Financial PR)      Tel +44 (0) 774 8843 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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