Scotgold future at risk by poor gold grades and lack of funds

Lower than expected gold grades and potential lack of funds threaten Scotgold Resources Ltd’s future at Cononish mine, said the company.

DECLINE OF GRADES

The Australian miner has altered its plans from extracting ore via level development and cut-and-fill stoping to “cost effective and efficient extraction of ore” with long hole stoping in Q2 2023.

In January 2023, the company focused on the 430 West ore drive, 415 East ore drive and the incline ramp accessing the 445 level.

The month saw 3,003t of ore mined and 2,620t of ore processed, although the average grade of processed ore was lower than predicted (5.65g/t actual compared with 7.35g/t planned of gold).

In February, Scotgold continued development on the 430 West ore drive for an additional 35 metres beyond design, expecting continuous ore.

However in late February and early March “gold grades began to decline significantly” and the West ore drive turned to waste.

Total ore production for February was 977t mined with 1,441t processed.

‘SIGNIFICANT DOUBT‘

Delays to the start of long-hole stoping in April, or if the anticipated tonnes of ore mined are “significantly” below the current mine plan, a “material uncertainty would exist”.

“[This] casts significant doubt over the ability of the consolidated entity to continue as a going concern in the very immediate term and therefore its ability to realise its assets and discharge its liabilities in the normal course of business.”

The company added it was in talks with its gold off-take partner for a US$500,000 advance and its directors have discussed providing a short-term convertible loan.

“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.”

MINED TONNES

At the start of March, the company shifted development to the 415 East ore drive alongside plans to bring forward long hole stoping to early April.

Scotgold had anticipated mining 5,818t of mineralised in February and March before changing to long hole stoping in Q2 2023.

The company now expects actual tonnes mined of 550 to 600 in March and about 3,000t of waste to place into required areas for stope drilling.

During the month, Scotgold began preparation works for long hole stoping in the eastern section of the 430 West ore drive over an initial stoping length of 115m.

Key works included level preparation, detailed stope design, drilling markup, development of safe working procedures, induction, training and supporting, toolbox topics and communications.

Long hole stope drilling began last week in the first stope panel and first blasting for long hole stope mining is on course to start in eight days.

The company will continue mining on the 445 incline ramp to ensure access to the 445 level.

Scotgold also confirmed no serious health and safety incidents this year.