Scotgold shares fall on “teething” issues at Cononish

Scotgold is focused on identifying areas with the potential to increase mineral resources within reach of the Cononish mine. (Image courtesy of Scotgold Resources.)

Shares in Scottish miner Scotgold Resources (LON: SQZ) dropped Friday as much as 11%, closing at 85p after it revealed a series of issues impeding its plans to ramp up production at the Cononish mine.

The company, which poured first gold at the asset in November, said tonnage throughput for January had been “negligible” due to “multiple materials handling issues” identified.

“Teething problems” encountered at Scotland’s first commercial gold and silver operation were focussed in three key areas, the miner said, namely crusher circuit chokes, flotation circuit pumps and filter press controls.

Scotland’s first commercial gold and silver operation experienced problems with crusher circuit chokes, flotation circuit pumps and filter press controls

Scotgold noted that most of those glitches have now been addressed and that any remaining issues will be dealt with by the end of February.

“Scotgold remains in a strong position to continue our commercial growth trajectory (…) despite the frustrating but resolvable materials handling issues that arose this month,” chief executive, Richard Gray, said in the media statement.

This year, the company will advance its exploration program, which is focused on identifying areas with the potential to increase mineral resources within reach of the Cononish mine, which is Scotland’s first commercial gold and silver operation.

Three prospective zones have already been identified as “high priority target areas” and data modelling is in progress to establish the best sites to test these targets in any potential future exploration drill programs, Scotgold said.

“We have had encouraging results back with further follow work planned and we look forward to keeping you updated on our findings,” Gray noted.

Historic area

Scotgold, which received initial approval for Cononish in 2018, has been working to reopen the abandoned gold mine near Tyndrum for 12 years.

The asset churned out gold in August 2016, following the launch of an ore processing trial. After the local authorities gave the project their blessing, the company began building a large-scale operation.

As many as 52 jobs could be created during production, and the firm has offered nearly £500,000 (about $612,000) in payments to support the nearby local community of Tyndrum.

Scotgold expects to produce 9,910 ounces of gold this year and reach 23,500 ounces by May 2022.