TIDMSGZ
RNS Number : 0702E
Scotgold Resources Ltd
02 November 2015
SCOTGOLD RESOURCES LIMITED
SEPTEMBER 2015 QUARTERLY ACTIVITIES REPORT
CONONISH GOLD PROJECT
On 5 August 2015, Scotgold Resources Limited ('Scotgold' or 'the
Company') announced the results of the Bankable Feasibility Study
('BFS') for its wholly owned Cononish Gold and Silver Project
conducted by Bara Consulting Ltd of the UK. This study is based
upon the Mineral Resource Statement announced in January 2015 and
confirms the Ore Reserve Estimate announced in May 2015, both of
which were compiled using guidelines recommended in the JORC Code
(2012). The Cononish Gold and Silver Project is part of the
Company's gold portfolio located in Scotland.
Summary of BFS highlights:
PRODUCTION
----------------------------------------------------
Average Production 72,000 tonnes
per annum
Average LoM Grade (Au 11.8 grams/tonne
Eq)
Average Metal Produced 23,370 ounces
equivalent gold*
per annum
Life of Mine 8 years
-------------------------- ------------------------
FINANCIAL (at Gold US$1,100/oz & Silver
US$15/oz)
----------------------------------------------------
Peak Funding Requirement GBP18.5M
Unit Operating Costs GBP327/ounce equivalent
gold (US$523/ounce
equivalent gold)
EBITDA GBP67M
Net pre-tax cashflow GBP43M
NPV (10%) pre-tax GBP23M
IRR pre-tax 45%
Payback Period 19 months
-------------------------- ------------------------
* Ounces equivalent gold = ounces gold + ounces silver*15/1100 -
ratio calculated at base case prices of $1,100/ ounce gold and
$15.00/ ounce silver
PRE-TAX CASHFLOW SENSITIVITY TO GOLD
PRICE
----------- ---------- ---------------------------------------------------------------------
Gold US$700/ US$900/ US$1,000/ US$1,100/ US$1,200/ US$1,300/ US$1,500/
Price ounce ounce ounce ounce ounce ounce ounce
----------- ---------- --------- ---------- ---------- ---------- ---------- ----------
Pre GBP1.5M GBP22.5M GBP32.9M GBP43.4M GBP53.9M GBP64.3M GBP85.3M
Tax
Cashflow
NPV (GBP4.4M) GBP9.3M GBP16.1M GBP22.9M GBP29.8M GBP36.6M GBP50.3M
(10%)
IRR 0% 25% 35% 45% 54% 64% 82%
----------- ---------- --------- ---------- ---------- ---------- ---------- ----------
-- Robust Project economics using a base case gold price of
US$1,100/ounce (GBP688/ ounce) with a EBITDA of GBP67.4M, a pre-tax
free cashflow of GBP43.4M, pre-tax NPV(10%) of GBP22.9M and a
pre-tax IRR of 45%.
-- Low operating cost with Life of Mine ('LoM') average of
GBP327/ ounce equivalent gold (US$523/ ounce equivalent gold)
(including Royalties) and Project breakeven (0% IRR) at US$689/
ounce equivalent gold
-- Peak Funding Requirement of GBP18.5M and all in LoM Capital
including contingencies, replacements etc. of GBP24.0M
-- Average annual gold production of 23,370 ounces equivalent
gold with peak production in Year 2 of 28,540 ounce equivalent
gold.
-- Average LoM grade of 11.8 grams equivalent gold /tonne and
peak grade of 15.4 grams equivalent gold/ tonne in year 2.
-- Rapid Implementation schedule of 16 months post contract and
finance completion and short payback period of 19 months from full
production.
-- Based on the earlier PFS, the Company has been offered
indicative terms by leading banks to provide debt finance for the
majority of the project's funding requirement.
-- Completion of this BFS facilitates the selection of the
preferred finance route and the signing of a mandate with the
selected institutions in near future
For greater detail on this study and the parameters used to
derive these results, refer to the Company's announcement
(05/08/2015 - Cononish Gold and Silver Project Bankable Feasibility
Study) on the Company's website.
The BFS Study Executive Summary is also published on Scotgold's
website at www.scotgoldresources.com
GRAMPIAN GOLD PROJECT
Structural study
The Company engaged the services of Dr. Pablo Gumiel and Dr.
Mónica Arias of Consulting de Geología y Minería, S.L., to conduct
a structural study of the Cononish deposit and Tyndrum area. Dr.
Gumiel is an expert in structural geology and the structural
control of mineral deposits with over 38 years' experience in
research and mining exploration. Dr. Arias has over 15 years'
experience as a specialist in database management of
geological-mining data, Geographical Information Systems (GIS) and
3D geological modelling. Drs. Gumiel and Arias have spent 30 field
days, over three 10 day periods in May, July and September 2015,
collecting data in conjunction with the exploration team.
In addition, Drs. Gumiel and Arias have undertaken significant
work to develop, and expand existing, structural models for both
the Cononish deposit and the wider Tyndrum area. The study aims to
bring the large volume of existing data together into one model,
utilising all of the various datasets. When the ongoing review of
the combined data model has been completed, this study will create
a 'first pass' prospectivity model, utilising a set of structural
and geochemical criteria that appear to control the distribution of
gold across the Cononish/Tyndrum area. This model will be used to
determine which areas have the highest likelihood of gold-bearing
quartz veins being located. The structural and geochemical criteria
used in the model will be tested and refined through field work and
further understanding of the structural setting of the Cononish
deposit. The controls for the Tyndrum area are anticipated to be
applicable across the Grampian Project region and will therefore
aid and focus regional exploration. Once the prospectivity
modelling is complete, Scotgold will re-evaluate high grade outcrop
samples identified by previous exploration close to the Cononish
project.
Stream sediment program
In order to advance its understanding of the regional setting,
over the past four years, the Company has embarked on a regional
stream sediment sampling program. To date more than 1100 stream
sediment samples have been taken across the regional area with
assay results returned for 1,055 samples (to end-September 2015).
Analysis of the returned stream sediment data, in conjunction with
work undertaken by Drs. Gumiel and Arias, has indicated the
presence of a significant number of gold anomalies in the better
covered Glen Orchy licence area and a number of anomalies
throughout the other licence areas. Five key anomalies in the
Knapdale licence area have been infilled and the results are
currently awaited. Anomalies in Glen Lyon, Inverliever and Ochills
require infill sampling to gain a greater understanding of the
distribution of gold in these areas. The stream sediment sampling
program has a further 350 samples to be collected, with the
majority of the outstanding samples forming an infill program which
aims to follow up anomalous results or to increase data
coverage.
Licence areas update
The Company holds five option agreements with the Crown over the
highly prospective Dalradian sequence in the south western Grampian
Highlands of Scotland. The Crown has informed the Company, subject
to the conclusion of the appropriate legal agreements, that is has
re-granted all the Company's existing option areas for a further 3
years, subject to a reduction in area in the Inverliever option
area. The Company is currently finalising these agreements with the
Crown and expects them to be concluded shortly.
CORPORATE
On 27(th) August 2015, the Company announced a pro-rata
non-renounceable rights issue (Rights Issue or Offer) of fully paid
ordinary shares in the capital of the Company (New Shares) on the
basis of one (1) New Share for every ten (10) existing shares held
at the record date of 4 September 2015 (Record Date) at an issue
price of 1.3 cents each, together with one (1) free attaching
unlisted option per New Share subscribed (Options). The Options are
exercisable at GBP0.01 on or before 30 September 2017.
Subsequently the Company advised that its pro-rata
non-renounceable rights issue had closed on 30 September 2015.
A total of 95,295,889 new shares were applied for under the
Rights Issue to raise approximately $1,238,846 (before costs) and a
total of 95,295,889 Options will be issued under the Rights Issue.
Accordingly, the shortfall under the Rights Issue was 18,243,341
shares and 18,243,341 Options, as follows:
Event Number $ % of total
offered
under
Rights
Issue
---------------------------------- ----------- ---------- -----------------------
Shares applied for under
Rights Issue 91,090,481 $1,184,176 80%
---------------------------------- ----------- ---------- -----------------------
Shares applied for under
Excess Entitlements Facility
(by eligible shareholders
in excess of their entitlement) 4,205,408 $54,670 4%
---------------------------------- ----------- ---------- -----------------------
Total shares to be issued 95,295,889 $1,238,846 84%
---------------------------------- ----------- ---------- -----------------------
(MORE TO FOLLOW) Dow Jones Newswires
November 02, 2015 02:00 ET (07:00 GMT)
Scotgold Resources (LSE:SGZ)
Historical Stock Chart
From Jul 2024 to Aug 2024
Scotgold Resources (LSE:SGZ)
Historical Stock Chart
From Aug 2023 to Aug 2024
