The original BFS, completed back in August 2015, suggested a pre-tax net present value of £23mln although that has now been significantly increased to £43mln.
The updated study has also upped the life of mine EBITDA (underlying earnings) to £100mln from £67mln, while the peak funding requirement has gone the other way, from £18.5mln to £7.4mln.
As well as boosting the economic side of the project, the BFS also indicated that the ‘phased project’ development option would be the “most favourable”.
The first phase – which is set to be up and running by early 2019 – will see Scotgold process 3,000 tonnes per month (tpm) of ore, before ramping up to 6,000tpm by the third quarter of 2021.
Of course that’s all subject to obtaining the necessary permits and financing, but Scotgold seems confident and expects final permission for underground development work to be awarded by the first quarter of 2018, with work starting the following quarter.
As for the financing, the miner has agreed a £1mln loan facility with its chairman, Nat le Roux, although £0.3mln of this will be used to pay back an existing loan to le Roux.
The loan, which is for one year and carries interest of 10% per annum, is expected to provide enough working capital to fund Scotgold through the planning application process.
The bulk processing trial (BPT) at Cononish – which was recently granted an extension through to March 2018 – has helped Scotgold optimise the final production process and plant design.
The revenues generated from the BPT will also contribute to the company’s working capital requirements for this year.
“It is extremely gratifying that we have managed to use the experience of the BPT to re-engineer aspects of Cononish and add significant value,” said chief executive Richard Gray.
“With our improved economic returns and short term funding secured which avoids undue dilution for the existing shareholders, we now look forward to securing an attractive full financing package and subject to permitting, putting our mine into production at the earliest opportunity.”
Scotgold said the original resource and reserve estimates remain the same as does the overall recovery rate of 93%.