Herald

Not a bad article although the SP never fell back that low and they are using old figures that includes a 16.6 % contingency allowance and the old lower grades on production costs and a 15% contingency on project expenditure . Lots of room for improvement on production costs and Capital costs

Nice to see what I have been harping on about for years in this article , lol , even nicer to see it happen !

New prospector for Scottish gold sees hope in those hills
Simon Bain
Business Correspondent/Personal FINANCE Editor
Saturday 14 March 2015
Richard Gray has spent his life digging for GOLD around the world but hardly expected to be doing so in a national park, in a country where underground mining seemed strictly heritage.
But the English mining engineer took over five months ago at the helm of Scotgold Resources believing he could turn the dream of producing GOLD from the Scottish hills into reality.
Mr Gray, 55, has spent over 25 years in the goldfields of Africa, most recently as head of mining at Avocet which had taken over his previous company Vega Mining. "My background is as a mine operator and field project manager, and in chief executive-type roles on the production side, but I do have an MBA, I'm reasonably FINANCIALLY literate," he says.
By late 2013, former chairman John Bentley was admitting that getting the Cononish mine near Tyndrum into production was now "an uphill struggle", and the company had a £1.2m bridging LOAN that it was struggling to repay.
Enter Scot Nat Le Roux, IG Index founder and a London Metals Exchange director, who brought in mining turnround specialist Richard Harris last year. "I went to school with Richard Harris," Mr Gray says. "He's also a mining engineer, we meet from time to time, the planets were aligned as I was back in the country having left Avocet. He asked if I could come in and do some due diligence, and I concurred with their view there was something really positive there."
The financial rescue has seen Mr Le Roux end up with a 44per cent stake and the company with enough CASH to progress, though a further share placement is now needed to fill a £300,000 shortfall from the most recent rights issue.
To sceptics, the promise of gold from Cononish in the Trossachs near Tyndrum is already years overdue, with the company's founding chief executive Chris Sangster having said the mine would be viable with gold at $1100 an ounce and first gold could appear in 2011.
Scotgold Resources was floated on the Alternative INVESTMENT Market at 6.6p in 2010 and hit 6.9p when the national parks authorities said controlled small-scale mining could boost the local economy.
Then the GOLD PRICE tumbled from $1600 to $1300 within a few months, and suddenly the project was in trouble. It has run up losses of over £4.5m and even now, 2017 is the earliest predicted date for Argyll gold.
Mr Gray explains: "FINANCING was to be through a gold loan and paying it back in a four-year plan. If the gold price drops you can borrow less, and as the price fell appetite for equity had gone through the floor. So it was a perfect storm."
He goes on: "Chris (Sangster) has done a manful job in steering the company through the planning process, he is fundamentally an engineer, we needed to move things forward and we wanted to beef up the resources a bit. We retained Chris on a consultancy basis, it gives me time to go out and solve FINANCING problems leaves him to get on with technical work which we recognised needed doing."
That work has helped sentiment improve towards the company's bombed-out shares, which were sitting at around 0.25p last year and rose briefly to 1.32p in January before falling back to 0 .45p.
First came an improved planning consent, allowing the mine to work 24 hours a day not 16, and then a significant upgrade to the estimate of what is underground.
Mr Gray says new 3D mapping of the 'orebody' has given a far more accurate picture of the volume and grade of gold that is 'measured' or 'inferred' as opposed to merely 'indicated'. "The official reserve has to come from the two higher categories," Mr Gray says. Whereas Mr Sangster had originally talked of 163,000 tonnes, and the previous reserve had been 196,000, the new figure is 541,000, and the grade rating is up from 13.1 to 14.3 grammes per tonne. The conservative mining plan envisages 444,000 tonnes at 9.1 grammes per tonne, though Mr Gray says the latter figure will come in significantly higher. "That is a big positive," he adds.
The plan suggests an operating cost of $700 an ounce (gold is currently at $1200) , and a capital cost of £23m, which could be trimmed by 10 per cent thanks to 24-hour mining requiring less powerful machinery.
Mr Gray says: "We have got to FINANCE the new plan....gold stocks have been hammered but the price has stabilised, that pain is fading, and people start to see opportunities again....We can't see gold going much lower."
Equity backers look for maximum bank support, while lenders inevitably want to see plenty of equity, the chief executive says. "That is the whole juggling act...but all being well we would anticipate that with an 18-month construction phase we will be pouring gold by the end of the first quarter 2017."
The geological gold and silver DEPOSIT, which has already spawned a £50m market value for miner Dalradian in Ireland, has a total resource estimate of 3m ounces making it a "world-class deposit", Mr Gray says. In the Grampians, Scotgold is already stream-sampling on its further land holdings, and next plans aerial mapping. "We hope we could find more Cononishes and maybe even something bigger."
There will also be exploratory work around Cononish. "There is alot of potential to find a lot more, at depth and to the west." But that would only be considered in three to four years' time, Mr Gray stresses.
He says: "There is a renaissance of interest in mining throughout Europe. It has been viewed as a slightly Dickensian activity which should be done somewhere else, but should we be relying on other parts of the world for our strategic minerals? Several countries in Europe are dusting off their mining codes."
He believes the company could build a pipeline of similar projects, adding: "The fact that we have got a permit in a Scottish national park is a huge feather in our cap. We see that as proving we can do a small but high-quality operation that supports all the best practices. It will open doors for us elsewhere."