Scotgold Resources has revealed that it is working on additional funding to support delivery of this year's mine plan.
As a result of impacted fourth quarter gold production and sales, the company’s financial and working capital position has been "adversely affected" with a current cash balance of around £350,000 and a net debt position of £12.6m.
In its fourth quarter trading update, Scotland's first commercial gold producer explained that the problems were primarily due to changing the short-term mining schedule to expedite continuous long hole stoping in the western areas of the mine, as well as weather conditions in December.
Fourth quarter gold production as concentrate and doré totalled 1,805 ounces, with an additional 324 ounces mined in December, but had to be stored underground as weather conditions didn’t allow for the mining trucks to move it out safely.
Year to 31 December 2022 gold production totalled 8,564 ounces of gold - up from 2,623 ounces during the same period in 2021.
Gold concentrate shipments totalled 236 tonnes, with a sales value of £2.2m, during the final quarter, while during the year to 31 December 2022, gold concentrate shipments totalled 1,078 tonnes, with a sales value of £11.9m.
Scottish gold doré sales made to Scottish jewellery companies during the fourth quarter totalled £25,420.
Mining development over 2022 continually increased, as a result of improved availability of the mine fleet and capital works invested, including underground power and ventilation upgrades, resource definition and grade control drilling.
Underground power and ventilation upgrade allowed further access to the mine ramps and tunnels at higher productivity rates.
The capital received from Fern Wealth last year, along with the new mine design completed in 2022, allowed three development headings of mining, allowing Scotgold to drive to the first stope mining area planned for the second quarter of 2023.
The majority of capital project works were completed over during the second half of 2022, and focussed on increasing the mine production rate. The capital works program, in combination with the changes to the mine design and development plan are expected to underpin increased development productivity and ore extraction.
"However, until long hole stoping forecast to commence in Q2 2023 commences mine production will be the limiting factor for gold production," the update noted.
This year's production guidance is set between 11,500 and 13,500 ounces of gold.
This year's mine plan is focused on achieving sustainable and continued ramp up to 2,000 ounces of gold per month.
There are also plans for resource expansion, firstly through increasing knowledge of the gold vein in close proximity to the existing Cononish vein by commencing a drill campaign off the back of work conducted in 2022 - and then to extend the same methodology to the other areas within the 2,900km area held by Scotgold.
Chief executive Phil Day said: “2022 has been a year of significant development at Cononish - advancing a mine and transitioning from development through to a long-term mining method, such as stoping, is always challenging, however I am pleased with the significant progress that has been made over the past year.
“December 2022 has been by far our most challenging period in terms of the underground mine development, as announced on 21 December, which has put significant short-term strains on the business.
“However, mining in the New Year has been progressing well and in line with the mining plan, achieving 78 meters of mining development as well as circa 500 ounces of gold mined, and 1,600 tonnes of ore mined and processed through the process plant.
“Our 2023 mine plan is focused on high grade and increasing ounce production, which in turn with lowering cost per ounce as the mine moves towards full production will generate significant cash generation per ounce.”
The company poured first gold in November 2020 at its mine in Tyndrum and is developing it into a 23,500-ounce per annum site.
The mine, which employs around 100 people, has anticipated forecast operating costs of around £610 per ounce by the end of this year, which would place it in the lowest quartile of gold mining operations globally.
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