EXTRACTING gold from the Scottish hills is a tricky business, as Scotgold Resources will readily testify.
The company underlined the ongoing technical challenges it has faced at its Cononish mine in Argyll in recent months in an update to the stock market today.
Following a troubled first half that forced it to make some fundamental changes to the production process and turn to shareholders again for capital to support its plans, Scotgold has commissioned a third party to carry out a complete review of mining operations near Tyndrum in the west of Scotland for the next 12 months.
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After so much upheaval during the first half, which saw the company halt production in the mine’s 430 West Ore drive development amid declining gold grades and make a technical shift to the long-hole stoping method, it is understandable that Scotgold is looking to take stock of the progress it has made at Cononish and work out the best way forward.
But, with the company stating that it has withdrawn its production guidance for 2023 while the review is carried out and its findings analysed, it is unclear whether shareholders are optimistic about the strategy.
Shares in Scotgold fell by more than 14% as investors responded to news of the withdrawal of production guidance and the company’s admission that uncertainty continues to hang over its long-term future, even though encouraging noises were made about the long hole stoping strategy to date.
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Scotgold warned: “The ability of the group 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 previously planned product shipment schedule. This schedule is being reviewed as part of the third-party review of the mine plan commissioned by the company.”
Mining for gold and silver in Scotland may seem like a romantic story. But much like the course of true love highlighted by Shakespeare, it is far from smooth.
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