March 19, 2012Will Scotgold Become The First Platinum Miner In...

March 19, 2012
Will Scotgold Become The First Platinum Miner In Scotland?
By Alastair Ford
“It’s most interesting”, says Scotgold’s Chris Sangster when Minesite gets in touch to talk about the company’s recent announcement that it has discovered platinum and other associated metals on its ground in the Grampian Highlands. “It’s not common around these parts.”

Drilling at Cononish
Almost unprecedented in fact, although Chris does concede that the Dalradian rocks on which all of Scotgold’s licenses lie are prospective for most things. “It’s a good address”, he says. And across the water, in Ireland, exploration has turned up some platinum shows in the past. Even so, it was hardly surprising that in a soporific market the news the company’s share price up by more than 10 per cent to 5.875p. The subsequent tumble in the gold price has wiped out most of those gains. But there’s no doubt the market is interested.

Among the better results from the AQ drilling programme was an intersection running at 0.22 grams per tonne gold, 0.78 grams palladium, 0.58 grams platinum, 0.75% copper, 0.18% nickel and 0.01% cobalt over two metres. Three other holes delivered mineralisation at similar orders of magnitude, and an additional three showed anomalous platinum and palladium. But what does it all mean?

It’s early stages, but the background notes accompanying the notes weren’t shy about making comparisons to certain parts of the mineralisation at Sudbury, to Voisey’s Bay, and to Lac des Iles. Heady stuff, given the significance of those projects, but Chris is quick to dampen the fires of enthusiasm to more manageable levels. “The grades on surface aren’t necessarily economic at those widths”, he says. “What you’re actually looking for is somewhere in the pipe where the sulphide is more pronounced. If you can find a massive sulphide lense within that orebody, then you’re looking at something that’s economic.”

Sounds like he’s already clear about his next step. “In three months we’ll go back and do ground geophysics”, he says. “Or we might need to do an airborne survey over a wider field.” And the follow-up to that will be more drilling to establish the lateral extent of the mineralisation, and to test it at depth to see if the grades and widths improve.

So, will Scotgold be Scotland’s first platinum miner? “It would be good”, says Chris, “though there’s a lot of water that needs to flow under the bridge first”. And that’s probably putting it mildly.

Scotgold’s primary task remains getting Scotland’s first gold mine up and running. And although the company’s shares did tick up by more than ten per cent when news of the platinum find was released, there’s no doubt that investors are now primarily concerned with getting gold out of the ground at the flagship Cononish development.

After a long wait that moment is edging closer by the day, but there still remains the small matter of raising the £12 million-plus in funds that will be required to make it happen. And that task will be taking up a lot of Chris’s time over the next few weeks. At the moment Scotgold is in the process of completing an infill drill programme at Cononish designed to provide more certainty to potential financing partners.

Talks with such potential partners remain “ongoing” according to Chris, and he’s confident that with a fair wind he can have Cononish up and running and producing its first gold by the fourth quarter of next year. The company’s protracted issue with the Scottish National Parks Authority and planning permission now looks to be well and truly behind it, following the formal granting of planning permission in February this year.

Investors may be forgiven for breathing a sigh of relief that the new platinum find lies outside the National Park, given the twists and turns that Scotgold was subjected to in gaining permission for what is after all only a small mine, not likely to produce anything over 30,000 ounces a year.

The problem appears to have been aesthetic rather than environmental, although preserving the Cononish Glen in line with some 18th century idea of the sublime never sat well with locals in the nearby town of Tyndrum who are in desperate need of employment opportunities in the area work, nor indeed with the local landowner who has run sheep across the ground for his whole life. He didn’t appear particularly disposed to upholding romantic ideals when Minesite ran into him during a quick visit last year.

In fact, his son was working one of the company’s drill rigs a short distance away from Cononish at a promising exploration prospect called the River Vein. Results from drilling here, released in January, showed 9.7 grams per tonne gold over 0.4 metres, with associated silver, lead and zinc, and 4.39 grams per tonne with associated silver, lead, molybdenum and tellurium. More results are pending, and follow-up work is planned once the weather improves.

So, one way or another, although Scotgold will join the ranks of the producers within the next two years, what with platinum on one prospect and gold on several others, it looks like the real exploration work may only just be beginning.