Shares in Scotgold Resources jumped nearly 5% in early trading today (August 2) after the firm’s latest update on production at its Cononish mine in Argyll.
Scotgold – whose stock eventually closed up 2.5% at 62.5p – said work continued uninterrupted throughout July in the high-grade area of the mine, as planned.
The company added: “Mining activities further increased the volume and, importantly, the quality of ore stored on the stockpile.
“The ore thickness is wider than anticipated – producing more high-grade ore from this cut and fill section.”
A second dump truck for mining operations is expected to arrive at the end of August and will likely be available for use in September.
The “first pour” of commercially produced gold was achieved at Cononish, near Tyndrum, on November 30 last year.
There have been a few bumps on the road to production ramp-up since then – output at the start of this year was “negligible”, due to “multiple materials handling issues”, while Alternative Investment Market-listed Scotgold said Christmas and Covid-19 restrictions hampered its recruitment plans.
The company launched a review of the mine plan for Cononish at the start of April, and it concluded the ramp-up of production was likely to be slower than originally planned.
Scotgold’s market value plunged nearly 30% in late April after it warned output in its first year of production from Cononish would be “materially” below previous guidance.
It also revealed it was investigating financing options, including short-term loans from the directors.
But in early July Scotgold revealed it was mining high-grade gold ore “far quicker than anticipated”.
In today’s update, the firm said: “Scotgold’s dual focus is to further enhance safe production through consistency and stability of mine and process plant operations, in parallel with the opening of multiple faces of ore in the underground mine itself.
“As part of the risk analysis approach implemented by the company, the process plant was taken offline several times throughout July to conduct further proactive inspections of risk areas to prevent future failures.
“This work proved useful in identifying a number of preventative measures which has resulted in the process plant having been in 24-hour operations since this work was completed.”
Scotgold added: “This step-change has seen the process plant average over 90% of design throughput for the last 10 days of the month.
“As planned, the process plant produced sufficient concentrate throughout the month to allow another shipment of 25 tonnes of concentrate, further strengthening our goal to achieve steady ramp-up in production.”
Scotgold chief executive Phil Day recently told The Press and Journal there could be much more gold in the area around Cononish – and perhaps other parts of Scotland – than current estimates suggest.
He added the area around the mine was “massively underexplored” but may hold, underground, the potential for a gold industry that “could be a very large employer”.
Cononish already employs nearly 40 people, mostly recruited within a 50-mile radius, and Mr Day said this would increase as production ramps up.
Locals have warmed to the project after some initial opposition, amid hopes an influx of new workers may help to encourage builders to construct new homes and help to ease a housing shortage.
It is more than 14 years since Scotgold unveiled plans to reopen an abandoned gold mine at Cononish, on the edge of Loch Lomond and the Trossachs National Park. The firm had earlier acquired the site for £800,000 from the Swiss-based Oak Consortium.