Shares in Scottish gold miner Scotgold Resources rocketed 10% today after the company announced record production from its site at Cononish in Argyll.
Scotgold hailed its “strongest quarter yet” after gold output at Cononish, near Tyndrum, almost trebled between the first and second quarters of this year.
A total of 3,531 ounces of the precious metal were produced from the mine during the three months to June 30 – up 188% on Q1 and worth more than £5.1 million at today’s market prices. The Q2 result was well ahead of a forecast of 2,600-3,200oz.
We continue to move rapidly towards phase two production levels of a 23,500oz run rate of gold.”
Phil Day, chief executive, Scotgold Resources.
Second quarter gold concentrate shipments totalled 415 tonnes, with a sales value of £5m, taking the half year figure to 551 tonnes, worth £6.3m.
Scotgold said its definition of profitable production – three consecutive months of positive operating cash flow – had now been met, meaning commercial output started on July 1.
Chief executive Phil Day said: “This has been our strongest quarter yet for Scotgold, characterised by record gold production which exceeded guidance, record gold sales translating into significant cash generation and continued progress on the ground to meet our production and operational targets.
“In the short term, we are focusing on our transitional optimisations at Cononish, undertaking low capex (capital expenditure) initiatives to continue to drive the production ramp up.”
Scotgold expects a further boot to output from new technology being installed at the mine.
Mr Day added: “We continue to move rapidly towards phase two production levels of a 23,500oz run rate of gold.
“We remain impressed with Cononish’s high-grade gold geology and anticipate the operations and cost control discipline of our team will enable the mine to be even more cash generative and profitable as it moves from phase one to phase two.”
Scotgold plans to continue exploration activities in and around its Cononish mine and within its licensed 1,120 square mile area in preparation for new exploratory drilling in 2023.
Shares in the Alternative Investment Market-listed firm (SGZ) reached 79.75p earlier today, before settling back to 77.5p – up 6.9% – at market close.
Sheldon Modeland, of financial services firm Shore Capital Markets, said: “During Q2 management continued to focus on mine development with the opening of several faces for cut and fill – stope mining.
“This type of mining allows for more efficient ore extraction as well as improved grade control definition for the mine plan, leading to increased gold recoveries and production. A third cut and fill stope is currently being targeted for Q3-Q4.
“Record gold production and achieving commercial production during Q2 is proof that SGZ’s optimisation plans are working.
“It has one of the highest grades and margins compared with other gold producers, which we believe the market has not yet fully appreciated.”
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