The AIM-listed miner said it had re-estimated its life of mine financial model for Cononish assuming a gold price of £1,200 an ounce from a previous estimate of £920 an ounce, with the resultant earnings (EBITDA) for the project rising to £147mln from £101mln.
The increased price of gold, alongside an expected pipeline of projects from exploration work at the group’s Grampian project, “bode well for the company’s long term outlook”, said Scotgold chief executive Richard Gray.
The firm also issued an update for Cononish, saying that mine development was “on schedule” and access to ore was expected by the end of 2019.
However, the construction of a process plant was behind schedule, meaning first gold production was now expected at the end of February 2020, compared to the original date of December 2019.
As a result of the delay and other cost re-estimates, Scotgold said it had revised its funding requirements to an additional £2.5mln, which in turn had been addressed by an extension to an existing bridge barn loan facility by £1.5mln and a subscription of around 3.3mln new shares at a price of 35p each, mostly by three company directors and a member of the company’s management team, to raise £1.15mln.
In lunchtime trading, Scotgold shares were 4.8% lower at 34.8p.