Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Scotgold’s Richard Gray upbeat as planning granted for Cononish gold mine development

Scotgold has won permission to proceed with a modified mine plan at Cononish
Scotgold’s Richard Gray upbeat as planning granted for Cononish gold mine development
Scotgold's Richard Gray

It’s not easy building a gold mine in a National Park, even if the locals are all in favour and the boost to the regional economy is likely to be significant.

But Scotgold Resources Ltd (LON:SGZ) has now got full permission from all the relevant authorities to build a mine slightly modified from the original plan in that it will put the tailings in dry stacks that have been de-watered in the plant.

READ: Scotgold receives green light to develop Scotland's first commercial gold mine

The Parks Authority did take into account objections from a group called Mountaineering Scotland, but in the end the economic well-being of the Park’s inhabitants held greater sway.

It’s helpful too, of course, that Cononish is actually a very small mine by international standards, and that all of the actual mining will take place underground.

So there will be some traffic up the valley, but guess what? – the man who owns the land that this traffic will pass through is all in favour.

“The community were in full support,” says Scotgold’s chief executive Richard Gray. “There will be a positive contribution from Cononish.”

It’s true that certain documentation remains to be completed, but to all intents and purposes the way is now clear for development of Cononish to begin in earnest.

Funding nearly there

Not all of the money to pay for that development is in place yet. But a good portion of it is.

“The first chunk of financing was put into place with our rights issue and raised £3mln,” says Gray.

“That’s 30% of what we’re looking for. We said we’d look at options for the rest of the money once the planning was in place. So we’re now looking to complete the funding fairly promptly. But with the £3mln in place we can start the project.”

The plan is to take a phased approach, to start with an operation that will produce around 12,000 ounces of gold per year.

Cashflow from that production will then be ploughed back in and used to expand the operation to a production rate of 24,000 ounces per year.

So, with another £7mln needed to get the ball really rolling, Gray says he’s ready to consider all potential sources of funding.

Among those he mentions that are under consideration are a form of senior debt, or a form of vendor finance.

It’s also worth noting though, that the company has been well supported in recent years by key shareholder Nat Le Roux, the man who underwrote the rights issue.

He now holds just over 53% of the shares, and would be unlikely to come in for any more equity.

But he is connected in some interesting ways, having formerly served as chief executive of IG Group, the derivatives trader, and as an independent director of the London Metal Exchange.

All told, the momentum is now with Scotgold, the local village of Tyndrum looks due for a long-awaited economic booster shot, and Scotgold shareholders can look forward to a re-rating as production edges closer. 



View full SGZ profile View Profile

Scotgold Resources Timeline

Related Articles

Otis Gold makes leap at Kilgore with improved indicated resource as CEO upbeat about size of project
August 21 2018
Significantly, the higher confidence indicated resource has been lifted by 59% compared to a previous report six years ago.
March 06 2018
Viscount Mining is sitting on two highly prospective gold projects in the USA
Gold fragments
SP Angel said the company could be “one of the top-yielding precious metals producers on the London market”

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use