Scottish gold miner Scotgold Resources says its Cononish production site in the hills of Argyll could be operational for at least 18 years.
The lifespan of Cononish, near Tyndrum, is currently estimated at 8.5 years.
But in full-year results earlier today (December 22) Scotgold said it saw potential to more than double this.
Our Cononish underground gold mine has a world-class ore-body. It’s exceptionally high-grade.”
Phil Day, chief executive, Scotgold Resources.
Gold and silver production at the site has ramped up during 2021, with Scotgold now employing 73 people – up from 38 in April, when chief executive Phil Day joined the business.
Some of Scotgold’s team have even become TV stars, appearing on BBC’s three-part Gold Town series.
The company is targeting a 23,500oz per annum “run rate” of gold production by the first quarter of 2023.
With the precious mineral currently fetching around £1,346 per ounce, even 8.5 years of production at Cononish would deliver a healthy return on Scotgold’s investment in the site.
Shares in the Alternative Investment Market (AIM) firm – founded as an Australian company in 2007 – rose nearly 8% to 68p following its latest annual results.
The company reported maiden revenue of around £161,400 for the year to June 30, after achieving the “first pour” of gold from Cononish at the end of November 2020.
Pre-tax losses for the start-up year came in at £2.68million, compared with a trading deficit of £1.35m in 2019-20. Two share placements raised around £4.12m during the latest period.
Announcing “significant progress” at Cononish, Scotgold said a redesign of the mine schedule was completed in May to allow for faster access to higher grade zones within the ore.
The firm added it had consistently achieved production revenues in excess of operational costs since August.
Foundations for growth
Mr Day said: “Since joining as CEO in April 2021, with a newly appointed leadership team at the helm, we have been focused on building our foundations to accelerate growth for the future as Scotland’s first commercial gold mining company.
“We have focused on the optimisation of our processing plant and mine development plan to increase the production rate of both our gravity concentrate gold, which produces gold dore for the Scottish jewellery market, and our high-grade concentrate, where we have an established off-take agreement.
“December production currently looks to be another step-change higher than previous months, further demonstrating the significant strides we’re making as a team.”
Dore is an alloy of precious metals containing a high percentage of gold and silver.
Mr Day added: “Our Cononish underground gold mine has a world-class ore-body. It’s exceptionally high-grade.
“As a high-margin operation, Cononish has compelling economics, with forecast operating costs anticipated at £544/oz AISC (all-in sustaining cost – a measure used by mining firms to report their costs), once in full production, which places Cononish in the lowest quartile of gold mining operations globally.
“It’s our intention to increase our current mine life of 8.5 years… and believe there is potential to develop Cononish into an 18-plus-year life of mine operation.
“In addition, it’s our strategy to continue to explore our additional licence areas which run across the prospective Grampian area of Scotland.”
He continued: “I’m excited for 2022 and confident it will be a year of continued growth for the company.”