Scotgold Resources Ltd raises £1.5mln in a placing

Scotgold Resources Ltd () said it raised £1.5mln through a placing and will use the proceeds for working capital through the current production ramp up at the Cononish gold and silver mine in Scotland.

It placed 2.1 million new shares at 70 pence each.

“Although progress has been made resolving the various production issues encountered, the lag between the timing of the re estimated production build up and sales receipts means that further working capital is required before the project becomes cashflow positive,” the company said.

Scotgold said the placing should fulfil this funding requirement, however a company owned and operated by its chairman Nathaniel le Roux will provide additional debt funding of £500,000 if needed.

Coronavirus (COVID-19) continues to have an impact on the Cononish mine’s overall development schedule, as previously reported.

Filter press issues, also previously announced, continued through most of March, hampering a ramp up of production, although progress resolving these issues has been made in recent days, it said.

Despite the continued delay to ramp up, the company still expects production for calendar year 2021 to be within the guidance range previously provided of between 28,500 and 25,700 tonnes of ore processed, and between 7,900 and 7,000 ounces of gold produced.

The company has deferred the target date for the completion of the planned Phase 2 expansion until September 2022, from the previous target of May 2022, partly because of the delays experienced in ramping up for Phase 1, but also to allow more time for an optimisation study to be completed on Phase 1 before finalising the design of Phase 2. 

Scotgold has lowered its estimate for the All In Sustaining Cost (AISC) for the period of steady production beyond the Phase 2 expansion from £461 an ounce to £430 an ounce using a reduced gold price and the revised scheduling for Phase 2.