Shares Magazine

This is from Shares Magazine, copied the old fashioned way by her indoors , thank you Christine

Formed in 2007, Scotgold listed on the ASX in 2008, and subsequently on AIM in 2010. The principal objective
of the company was and remains the advancement of the company’s 100% owned Cononish Gold and Silver Project in Scotland’s Grampian Highlands. Cononish was identified in the 1980s but serious work only began by Scotgold in 2007.
Since then much has been achieved, most importantly the gaining of planning permission for Cononish (which is situated within the Loch Lomond and Trossachs National Park) in 2012 and the completion of the Development Study conducted by AMC Consultants (UK) Ltd in 2013. However the company’s progress stuttered badly in 2013, when a
fall in the gold price (damaging investor sentiment towards the sector) coincided with the company’s intention to raise further funds to progress Cononish to development. Meanwhile the company’s financial
resources were being drained by its requirement to service a short term loan. It was only when a consortium led by Nat Le Roux, seeing the potential in the project, injected new funds and new management into the company and underwrote
a rights issue (enabling the loan to be redeemed in full) at the end of 2014 that the company’s prospects - and the prospect of constructing Scotland’s first ever gold mine at Cononish – were put firmly back on track.
New ManageMent, New impetus, Improved Resource
The consortium of new investors was led by Nat Le Roux, former chief executive of IG Group between 2002 and 2006, and Richard Harris, who founded Eleckra Mines, now Gold Road
Resources. Richard Gray, who had undertaken due diligence for the consortium and has a strong operational background in the gold mining sector with Avocet, Gencor and Gold Star, became chief executive officer with the remit of taking Cononish into production.
As part of this remit the company commissioned a new Mineral Resource Estimate from CSA Global, announced in January 2015, using the latest 3D modelling and geostatistical techniques. This dramatically increased the estimates in the measured and indicated categories to 541,000 tonnes at an average gold grade of 14.3 grams per tonne. The orebody also hosts over a million ounces of silver in the measured and indicated categories. The CSA report also noted that as the vein structure is open to the west and at depth, there is good potential to further increase this resource base with further exploration drilling.
Using the new 3D resource model, the company then undertook a complete review of the mine access design and mining methodology using Bara Consulting. Whilst this review confirmed the use of Long Hole Open Stoping (LHOS) as
the most appropriate method for the bulk of the orebody, significant improvements have been made to the access design which will minimise waste development, reduce haulage requirements (and costs) and improve the flexibility/ early access to the identified wider higher grade zones.
On the basis of the new Mineral Resource estimate and mine design, a new Ore Reserve estimate was completed and announced in May 2015. This again showed a significant improvement with 555kt in the Proven and Probable categories at average grades of 11.1g/t gold and 47.7g/t silver ( for 198koz and 851koz gold and silver respectively).
These increases in the quantum and confidence level of both the estimated Mineral Resources and Ore Reserves (completed in compliance with the latest JORC 2012 code) dramatically improves the attractiveness of Cononish to potential project finance partners. A Bankable Feasibility Study will be completed by the end July 2015 and this will demonstrate the full economic strength of the project.
Work with the National Park authority has continued – recently the company has been granted permission to operate its plant 24 hours per day for six days of the week (compared to the previously agreed 16 hours a day for six days per week). This development will facilitate efficient plant operation and potentially capital expenditure reductions- under the original mine plan this was £23million, but the change to 24/6 plant operation plus improved understanding of the shape and scale of the orebody could improve that figure.
New shareholders were recently attracted into the company through a £450,000 placing arranged by Joint Broker Vicarage Capital, whilst Nat Le Roux has continued to show confidence in the company by providing further funds. After completion of the Bankable Feasibility Study at the end of July, the company will focus on concluding the best possible financial arrangements to fund the necessary capital. Once secured, and with all the material permitting already in place, an approximately 18 month construction period will commence forthwith.
Beyond Cononish,
Scotgold has an extensive exploration area of 4,200 square km held in 5 tenements over the highly prospective Dalradian geological sequence in Scotland known as the Grampian Project. This sequence, in addition to Cononish, hosts significant gold ore bodies in Northern Ireland, namely Curraghinalt and Galantas Gold’s Omagh project. The company holds Option agreements with the Crown Estate (which owns the gold and silver rights) over these tenements and has agreed exploration programs for their advancement. In the longer term the company has the ambition of looking for other small scale but potentially highly lucrative gold mining developments across Europe where it can apply its skills and expertise with small, high grade deposits similar to Cononish.