Shares in Scottish gold miner Scotgold Resources are down nearly 16% after it said its working capital had been “adversely affected” by Q4 production woes.
The company is “working on additional funding” to support the delivery of its 2023 plan for mining gold and silver at Cononish in Argyll.
Scotgold recently slashed its fourth quarter production guidance to 2,000 ounces of gold, from 3,000-3,500oz previously.
It blamed technical challenges and last month’s “harsher than expected weather conditions”.
Shares in the firm tumbled more than 14% on that news, delivered on December 21.
December 2022 has been by far our most challenging period in terms of the underground mine development.”
Phil Day, chief executive, Scotgold Resources.
Today’s production, sales and operations update was also unsettling for investors, knocking 8.5p off the Alternative Investment Market shares. The stock was worth 46p at market close.
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Scotgold said it now had a cash balance of about.£350,000 and net debt of £12.6m.
The firm aims to ramp production up to 2,000 ounces of gold per month.
Full-year production guidance for 2023 has been set between 11,500 and 13,500oz.
The company’s gold production last year totalled 8,564oz.
Gold concentrate shipments totalled 1,078 tonnes, with a sales value of £11.9m.
Cononish, near Tyndrum, achieved its milestone “first pour” of gold in November 2020 and is now being developed into a 23,500oz-plus mine per annum.
Chief executive Phil Day said: “2022 has been a year of significant development.
“Advancing a mine and transitioning from development through to a long-term mining method, such as stoping (the excavation of a series of steps or layers in the ground or rock), is always challenging.
‘Significant progress’
“However, I am pleased with the significant progress that has been made over the past year.
“December 2022 has been by far our most challenging period in terms of the underground mine development, as announced on December 21, which has put significant short-term strains on the business.”
Mr Day said this year’s mining was progressing well and in line with the plan.
He highlighted 256ft of development, with about 500oz of gold and 1,600 tonnes of ore mined and processed through the plant.
Scotgold’s CEO added: “Our 2023 mine plan is focused on high grade and increasing ounce production, which in turn with lowering cost per ounce as the mine moves towards full production will generate significant cash generation per ounce.”
Scotgold said it continued to pursue three strategic pillars: optimising value at Cononish, growth through resource expansion and regional exploration; and “investment in people and commitment to sustainability”.
Other sites targeted for gold
The company holds 13 lease option agreements covering an area of nearly 1,120 square miles of the central Highlands, mostly in rural Perthshire.
Three prospective areas close to Cononish have been identified and the firm intends to explore these further.
Conversation