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viewScotgold Resources Limited

Scotgold’s Cononish gold mine ticks all the right boxes

Snapshot

Scotgold will pour its first gold at Cononish before the year end

Scottish gold should command a premium in the market

Quick facts: Scotgold Resources Limited

Price: 98.5 GBX

AIM:SGZ
Market: AIM
Market Cap: £53.27 m
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  • Low cost gold mine

  • Politically safe jurisdiction

  • Significant exploration upside

What Scotgold does

Scotgold Resources LTD (LON:SGZ) is the premier gold exploration and development company in Scotland.

The company is backed by entrepreneur Nat Le Roux and run by experienced mining engineer Richard Gray, late of Avocet Mining and Gencor.

What Scotgold owns

Scotgold owns the Cononish gold project in the Grampian region of Scotland.

The site of much early-stage development work in the past, Scotgold has been working for some years to bring the project all the way into production, with strong support from the local community in the nearby town of Tyndrum.

The company also has extensive exploration ground in and around Cononish as well as farther afield.

The main priority is production, but looking further out it’s possible that exploration work could yield another Cononish, or even, as Richard Gray occasionally speculates, a mine comparable to the one being developed by Dalradian across the Irish Sea.

The regional geology is similar, so the upside is very real.

The discovery of a project comparable in size to Cononish is a reasonable expectation, although the upside could be something much larger. The proof will come with drilling, and that will probably have to wait until production is well established.

What's the latest?

in October, Scotgold raised £3mln by way of a placing of shares at 110p each. 

The proceeds will be used to accelerate plans to double production at the Cononish gold and silver mine in Scotland.

Cononish remains on course to become Scotland's first commercial gold mine by November 30, the group said.

Funds will also be used to increase exploration activities, rolling out Scotgold's systematic programmes across its 2,900 square kilometre licence portfolio in the Grampian Terrane of Scotland. 

 Average annual gold equivalent production under the increased production plans will rise to 23,500 ounces from 9,910 ounces.

What the boss says: Richard Gray

"Our objective is to use the cash flow generative platform which Cononish is expected to provide to build a highly profitable, low-risk gold mining company operating in stable jurisdictions."

What the broker says: SP Angel 

“With £12m of Cononish capex spent, we estimate project NPV5% at £113m and arrive at NAV of £103m or 182p per share after adjusting for the estimated net debt position (as of Sep/20) and recent equity raise proceeds.” 

“No value has been assigned to an exciting exploration package reflecting its current early stage status.” SP Angel added.

 

 

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Scotgold 'expected to command a significant premium in the market' says...

Mining capital's Alastair Ford explains the significance of Scotgold Resources' (LON:SGZ) first gold pour at its Cononish mine, marking a milestone to becoming Scotland’s first commercial gold and silver operation. The company is now focused on completing an accelerated expansion plan to...

on 4/12/20

3 min read