SCOTLAND’S first commercial gold mining company plans to more than double its gold output to an annual rate of 23,500 ounces by next year as it hailed record levels of gold concentrate production.

Scotgold Resources said in an update to the City production totalled 1,257 oz of gold and 5,881 oz of silver for the first three months of 2022, which was marginally lower than guidance, with gold currently being mined at a rate of 9,910 oz per year, increasing to 17,500oz next month.

The Aim-listed firm has also developed tunnels to allow access to further seams of high-grade ore, despite coronavirus leading to up to ten workers in quarantine at some stages during the quarter.

Around 8,600 tonnes of ore was mined and transferred to the “run of mine” feed pad, where it is blended prior to being fed into the process plant, with an average gold content of 7.7 grams per tonne.

Scotgold developed the Argyll mine a further 325 meters in the quarter, which was described as a “significant step”.

A “cut and fill” stope, or excavation, saw 2,700 tonnes of ore at an average of 20 g/t of gold mined.

The Herald:

The increase in gold grade has seen April achieve record levels of gold concentrate production. Just over 138 tonnes of concentrate has been produced during April so far, which is “comfortably ahead” of any previous full month’s production.

There is also a further three cuts in the same excavation to extract, equating to an additional 6,000 tonnes of ore at around 17 g/t gold.

Scotgold said: “In summary, Q1 2022 was a quarter during which Scotgold executed the plan to develop tunnels in the underground mine to allow access to further areas of the mine where high grade ore exists.

“This meant the process plant had to process lower grade ore during this period.

“The company is pleased with how the process plant performed during this difficult quarter.”

Gold shipments had a sales value of £1.6 million. Shipping of concentrate was affected by global events.

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Gold production guidance for the second quarter is for 2,600 oz to 3,200 oz.

Scotgold also entered into an agreement with Fern Wealth GmbH, a wealth management company based in Switzerland, to arrange up to £3 million funding from a syndicate of high-net- worth investors to fast-track Cononish optimisation initiatives.

Phil Day, Scotgold Resources chief executive, said: “Whilst we achieved slightly lower gold production through the quarter as we developed through the lower grade areas in the mine so to access the areas of known high grade and set up ‘cut and fill’ stopes, we have focussed and delivered on our Q1 2022 objectives.

“Objectives included developing the mine and maintaining the process plant feed throughput at phase one rates, seeing us achieve a ten per cent increase on Q4 2021 mining and feed throughput to the process plant rate. These targets have been realised thanks to the hard-work and determination of our committed team here in Tyndrum.”

He added: “Cononish is a high-grade operation, and we are delineating gold grades of up to 35g/t for processing.

"Importantly by adopting this ‘cut and fill’ methodology to the short term mine plan we can better extract certain areas of the mine, obtain better indications of the geotechnical and resource characteristics in localised areas which allows for better stability and reliability of gold production going forward from the Cononish mine.

“Our intention is to continue developing tunnels in the mine so that we can access even further areas utilising the ‘cut and fill’ stope mining method to exploit higher grade areas efficiently.”

He said Cononish is “already a cash generative operation yielding attractive margins”.

Shares in Scotgold closed up 0.75% at 67p.