Scotgold Resources Ltd today said that Covid-19 continued to thwart developments at the Cononish gold and silver mine in Scotland.
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 | £/oz | 1,250 |
| Silver price | £/oz | 18.99 |
| 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 |
Modelled operating costs have also been adjusted where previous cost assumptions have been superseded by contract pricing, and where the costs are driven by the gold price assumption.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 |
Director shareholdings on admission
| Director | Current Shareholding | Current % Shareholding | Shareholding on Admission | Resultant % shareholding on Admission |
| Mr Nat le Roux | 22,618,223 | 41.82% | 22,618,223 | 40.23% |
| Mr William Styslinger | 5,931,400 | 10.97% | 5,931,400 | 10.55% |
| Mr Peter Hetherington | 2,088,961 | 3.86% | 2,088,961 | 3.72% |