Scotgold lowers guidance for Q3 production but expects it to then regain shine

Scotland’s first commercial gold producer Scotgold Resources has lowered its guidance for third-quarter production, but is expecting it to then see momentum rapidly pick up pace to meet its full-year target.

The Aim-quoted firm has provided an update for its Cononish Gold and Silver Mine in the Loch Lomond & The Trossachs National Park, now expecting production to be about 2,000 ounces of gold in the three months ending September 30, down from previous guidance of 2,900 to 3,500.

It attributed the drop to the “successful but delayed” commissioning of a relevant power and ventilation project, delaying mine-development on a waste ramp that allows key access, and noted that July and August gold concentrate shipments totalled 214 tonnes with a sales value of £2.6 million.

Chief executive Phil Day said: “We achieved commercial production in July 2022 and continue to operate as a cash-generative business. Notwithstanding the reduction in gold production in late August/early September and consequent knock-on reduction of Q3 2022 guidance to c.2,000 ounces of gold, due to the successful, but delayed implementation of the power and ventilation upgrades, I am excited looking ahead.

"The delayed ore extraction from the mine will be negated by the recent upgrades in power and ventilation and Q4 2022/Q1 2023 are set to be very robust quarters in line with our mine plan and forecast to see a significant increase to Q2 and Q3 2022 production.”

He expects about 6,000 tonnes of matter being processed a month in the last three months of 2022. “We remain on track to deliver Phase 2 of Cononish’s ramp-up and annualised production levels of 23,500 ounces of gold by the end of Q1 in 2023.”

Sheldon Modeland of house broker Shore Capital said: “Despite the lower-than-expected gold production during Q3 FY22 and the slight delay in commissioning of the tailings thickener, we are encouraged by the 33 per cent increase in throughput to c.4,000t per month when compared with Q2 FY22.” The analyst added that this helps indicate that Scotgold is “on track to deliver its annualised production rate of 23,500oz of gold by the end of Q1 FY23”.

Scotgold in June hailed record production for April and May, and in April said the Cononish project had reached an “exciting time” despite lower-than-expected production figures.