In the Grampians, on November 30, 2020, Scotgold Resources was able, in spite of all the coronavirus headwinds, to pour the first gold to come out of the Cononish mine in decades.
The mine is located near to the town of Tyndrum, which has been hard hit by the series of lockdowns that have come into force as a result of the virus.
Nonetheless, development at the mine itself, which is located in a relatively isolated position in a glen in a national park, has continued to the point where the separation of gold from ore using gravity circuits was able to begin in November, with gold production from flotation following on shortly.
The gold mine is located near to the town of Tyndrum
All of which, reckons Scotgold chief Richard Gray, can only be good for a local community in which Scotgold has already become a substantial employer.
‘In these difficult times it’s almost become a moral duty for us to get this mine up and running as fast as possible,’ he says.
The gold pour marks the first significant milestone in that process.
‘At the moment we’re still in the capital phase,’ says Gray. ‘But we plan to move to operational accounting withing three months.’
The plan is for output from Cononish to run at nearly 10,000 ounces of gold per year during the current first phase, and then rise to nearly 24,000 ounces in phase two.
The pace of the ongoing development and ramp up is likely to be frenetic, as a high gold price continues to spur the company on.
‘We’re cracking on with getting the equipment and supplies ordered for phase two,’ says Gray.
‘Our whole philosophy’s been to reduce capital expenditure, and that’s why we went for the two phase approach. But Cononish always was a better project in phase two.’
And the planned expansion has already been fully budgeted for.
‘In October we raised £3million, and that, combined with the cashflow from operations, means we can pay for phase two,’ says Gray.
Gold prices continue to rise, despite some recent dips
It also means that after production at Cononish has bedded down, the company will be able to look up and turn its hand to some broader exploration work in the surrounding district.
Scotland has been relatively quiet as a gold exploration destination over the past few decades, but the potential is significant.
As it stands, most of Scotgold’s initial targets are in the vicinity of the mine itself, and follow on naturally from historical work.
But the geological structures that underly Scotland’s potential gold endowment are the same ones that run under the Irish sea and support the Dalradian resource and others that are up-and-coming in Ireland.
Gray talks, in the longer-term, of eventually developing a gold ‘camp’ along the lines of the great Canadian gold mining regions, some of the most prolific in the world.
It’s a big vision, but one that now stands a substantially greater chance of materialising now that Scotgold is about to become self-funding.
A major factor will be the continuing strength in the gold price and, although there have been some recent dips, with governments continuing to print new money hand over fist Gray isn’t overly concerned on that score.
‘All these fiat currencies are going to be devalued,’ he says.
And there’s a further premium on offer too. The gravity portion of Scotgold’s output, which amounts to around 25 per cent, is likely to command a higher price than spot, as Scottish gold is much in demand.
So the choice becomes gold at a premium to spot, or cash that’s getting diluted every day?
Scotgold investors have been voting with their wallets, which is why the shares have more than doubled over the past 12 months.
And there should be more to come.
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