Scotgold cheers '˜significant' boost to mine plans
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The Aim-quoted company said that higher gold prices and changes to the design of a storage facility as its Cononish site near Tyndrum mean that its peak funding requirement has reduced to £7.4 million, down from previous forecasts of £18.5m.
• READ MORE: Gold miner seeks to extend Cononish processing trial
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Hide AdScotgold also told investors that the mine, in the Loch Lomond and the Trossachs National Park, is now expected to deliver underlying earnings of some £100m over its nine-year lifespan – well above an earlier estimate of £67m – following the success of its bulk processing trial (BPT).
The firm’s shares were up more than 4.7 per cent at 0.55p in early trading as it eyes approval for its amended project from the park’s planning authority by the end of this year.
Scotgold said it needed additional working capital to see it through the permit process, but chairman Nat le Roux has agreed to lend it £1m for one year at an interest rate of 10 per cent.
“The revised development plan now completed significantly lowers the financing hurdle and improves the economic returns, with significant further enhancement from the current pound sterling price of gold,” said le Roux, the Scots-born former chief executive of spreadbetting group IG.
Chief executive Richard Gray said: “It is extremely gratifying that we have managed to use the experience of the BPT to re-engineer aspects of Cononish and add significant value.
“With our improved economic returns and short-term funding secured, which avoids undue dilution for the existing shareholders, we now look forward to securing an attractive full financing package and subject to permitting, putting our mine into production at the earliest opportunity.”