Shares in Scottish gold miner Scotgold Resources tumbled more than 14% after it said it would fall short of production hopes this quarter.
But in annual results announced separately to the Q4 production update, Scotgold said it had made “significant progress” at its gold and silver miner at Cononish, near Tyndrum, Argyll.
Total revenue rocketed to nearly £10 million during the 12 months to June 30, from about £168,000 the year before.
Pre-tax losses more than doubled to £6.05m, from £2.8m previously, as the early-stage mine ramped up production.
Scotland said it had 96 employees by the end of last month, up from 31 on December 31 2021, and “ambitious” growth plans to continue to increase headcount during 2023.
Technical challenges and this month’s “harsher than expected weather conditions” has led to the company slashing its Q4 production guidance to 2,000 ounces of gold, from 3,000-3,500oz previously.
But Scotgold insisted it was on track for a target run rate of 23,500oz of gold per annum during 2023.
‘Disappointing’ Q4 performance
Chief executive Phil Day said: “Whilst it is disappointing to report that Q4 2022 production guidance will be missed, I am firm in my belief that it is not material in terms of near-term development of Cononish and realising phase two/full production in 2023 as planned.
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“As outlined in our final results and annual report, transformational progress has been made over the past year.
“I look forward to 2023 and reporting on our progress at Cononish as an exceptionally high-grade, low-cost, cash generative operation.”
In Scotgold’s results statement, Mr Day said: “When developing an underground mine to achieve full production there are sometimes short-term variations in ounces produced.
“This is normal and expected in underground mine development.
“As I write this, 2023 is shaping up to be an exciting year for us in terms of mine development and gold production and I look forward to reporting on progress throughout.”
We will continue to increase our headcount during 2023 and beyond through apprenticeships, internships and student bursaries.”
He added: “As ever, none of this progress would be possible without our talented and committed team here in Tyndrum.
“We have grown ambitiously, increasing our workforce 156% since I joined in April 2021, to 96 people, of which 51 are from Scotland.
“In line with our vision to build a multi-asset gold production company, we will continue to increase our headcount during 2023 and beyond through apprenticeships, internships and student bursaries.
“Whilst we anticipate significant cash generation, especially once full production is achieved during 2023, we are committed to continuing to grow and realise Cononish and Scotgold’s value through exploration.
“Looking ahead to 2023, I remain hugely excited and look forward to keeping stakeholders updated on our developments as we continue to build an intergenerational mining company for the future.”
Fool’s gold or Holy Grail?
By market close the Alternative Investment Market-listed firm’s shares were worth 52.5p.
This was an improvement from earlier trading but still down from 59p on Tuesday.
Shareholder comments range from “the trust in this once wonderful project is very quickly dwindling away change is needed before it’s too late” to “the Holy Grail is getting closer and the cliffs are truly now in sight”.
📣We have announced our full year results – It has been a year of transformative progress as we continue to ramp up production at our Cononish gold mine to full production.
Find out more below ↓ 🧵#SZG #Mining #Cononish #Gold pic.twitter.com/Iy7f6kKi9j
— Scotgold Resources (@scotgoldresltd) December 21, 2022
Cononish which achieved its milestone “first pour” of gold on November 30 2020, is only the start of Scotgold’s Scottish gold ambitions.
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 during 2022 and 2023.
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