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Scotgold Resources narrows losses as it looks to press on at Cononish

Only this week, Scotgold received an updated bankable feasibility which added “significant value” to the project
gold mineralisation
Sales of 'rounds' made from gold mined at Cononish generated more than US$80,000 for Scotgold in the first half

Scotgold Resources Ltd (LON:SGZ) told investors on Friday that it narrowed its losses in the first half of its year, as its focus remains firmly on its Cononish gold project in Scotland.

The company lowered its losses for the six months to 31 December 2016 to US$789,000, compared to the US$875,000 loss it posted last year.

The reduction was mainly down to lower overall costs as well as the small amount of income generated last year from the sale of the first gold produced at Cononish.

At the end of the period, Scotgold had US$329,400 in cash, compared to US$861,646 it had at the end of 2015.

The focus is still very much on Cononish, which got a boost earlier this week after an updated bankable feasibility study added “significant value” to the project.

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.

Shares in Scotgold were down 5% on Friday to 0.5p.

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