Metals & Minerals News

Scotgold still hindered by Covid-19 at Cononish mine

Scotgold Resources Ltd today said that Covid-19 continued to thwart developments at the Cononish gold and silver mine in Scotland.

New model: Scotgold Resources has re-estimated the project’s finances based on a revised schedule (Pixabay)

The filter press issues announced in February have continued through most of March and hampered production, although progress has been made in recent days to resolving these issues. 

The company said that, once resolved and with more continuous steady state plant operations, a further period of ‘bedding in’ and optimisation was expected before all design parameters were achieved.

Despite the delay, the company still expects production for 2021 to be within the previous guidance range of 28,500t – 25,700t of ore processed, and 7,900oz – 7,000oz of gold produced.

Scotgold has also been informed that under the current rules it is ineligible for a Coronavirus Business Interruption Loan Scheme.

The company added that it had deferred the target date for the completion of the planned Phase 2 expansion to September 2022, four months after the previous date of May 2022. 

This partly reflectes the delay in production but also provides the company time to complete an optimisation study on the performance of Phase 1, prior to finalising the design of Phase 2. 

FINANCES

Scotgold has also re-estimated the project’s finances based on this revised scheduling for Phase 2 and using a reduced gold price of £1,250/ oz, compared with £1,400/oz used previously in the model released in October 2020.

Project Returns: March 2021 to end of LOM
Gold price£/oz1,250
Silver price£/oz18.99
EBITDA£161.1 million
Pre-tax Cash Flow£126.6 million
Net Cash Flow£101.7 million
NPV calculation date 01 March 2021
Pre-tax NPV @ discount rate of 8%£82.3 million
Operating Margin%69.9
Average all in sustaining cost (AISC)£430/oz
Cononish Project re-estimation of key financial metrics (at £1,250 per ounce)

Modelled operating costs have also been adjusted where previous cost assumptions have been superseded by contract pricing, and where the costs are driven by the gold price assumption. 

As a result, the all-in sustaining cost (AISC) estimate for the period of steady production beyond the Phase 2 expansion has reduced from £461/oz to £430/oz.

Cost Dynamics: Project Lifetime
Capital Cost£34.4 million*
Operating Cost£70.6 million
Average Operating Cost/oz Eq Au.£381
Average Capital Cost/oz Eq Au.£186
Total Average Cost/oz Eq Au.£567
* Includes asset based finance costs & * Includes all capital expended since 1 Jan 2019

Director shareholdings on admission

DirectorCurrent ShareholdingCurrent % ShareholdingShareholding on AdmissionResultant % shareholding on Admission
Mr Nat le Roux22,618,22341.82%22,618,22340.23%
Mr William Styslinger5,931,40010.97%5,931,40010.55%
Mr Peter Hetherington2,088,9613.86%2,088,9613.72%
The beneficial interests of the directors of Scotgold in the ordinary share capital of the Company, currently and upon admission

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