Scotland's first commercial gold producer has warned that mining difficulties have "cast significant doubt" over its ability to continue as a going concern in the immediate term.
A trading update for Scotgold Resources explained that following last month's £2.5m equity fundraise to support the planned transition from tunnel development mining to long hole stoping, the plan anticipated that 5,818 tonnes of mineralised ore would be mined in February and March.
However, actual tonnes mined are now expected to be between 550 and 600 in March and about 3,000 tonnes of waste to place into required areas for commencement of stope drilling.
As a result of recent mining performance being below plan, largely due to lower than expected grades in the 430 West ore drive resulting in the subsequent decision to bring forward long hole stope mining, the directors now believe that, in the event that the planned commencement of long hole stoping in April is delayed - or the anticipated tonnes of ore mined in April and the following months is significantly below the current mine plan - material uncertainties will affect the ability to realise assets and discharge liabilities.
In order to safeguard against this potential shortfall in working capital over the next few months, directors have determined to take steps to strengthen the company's cash position.
It is in advanced discussions with its gold off-take partner to secure a $500,000 advance to assist with short-term working capital.
The directors have also discussed, if the need arises, providing a short-term convertible loan as a measure to ensure Scotgold continues with the long hole stoping deliverables.
"The ability of the consolidated entity to continue as a going concern over the long term will remain dependent on the quantity and grade of ore mined and processed being within a reasonable tolerance of the forecast quantity and grade and adherence to the planned product shipment schedule," read the stock exchange statement.
The Cononish gold and silver mine near Tyndrum saw preparation works commence in March to start long hole stope mining in the eastern section of the 430 West ore drive over an initial stoping length of 115m.
These works included level preparation, stope design, drilling markup, training and communications. Long hole stope drilling commenced in the first stope panel during the week of 20 March.
Mining will also continue on the 445 incline ramp to ensure access to the 445 level and establish further development drives in areas where the original resource and grade control models support high confidence mineralisation.
This area is also being designed and rescheduled to support continuous long hole stoping in the later part of 2023, with the aim of achieving full phase production by the fourth quarter.
In addition, Scotgold used today's announcement to noted that it has become aware that the email accounts of the executive directors were accessed by unauthorised persons and specious emails sent in their names to numerous people.
"While we believe the vulnerability has been fixed it is impossible to ever be certain of this," read the statement. "The police have also been informed on this matter and will continue to investigate."
The company is set to publish its interim results for the six months ended 31 December 2022 on 30 March.
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