Scotgold Resources has announced that it is undertaking a third-party review of the Cononish mine plan for the next 12 months.
The first half results for Scotland's first commercial gold producer revealed that this review will initially encompass an assessment of the mine design, schedule and production forecasts. It will inform 2023 production forecasts and will also incorporate a second stage of power and ventilation upgrades to improve mine accessibility.
This second stage of power and ventilation upgrade should allow a "step change" in development rates, opening up more mining fronts by enabling equipment to operate in parallel.
The company is withdrawing its 2023 production guidance and will update the market on production forecasts and its mine plan, once the third-party review is completed, and findings have been analysed.
On 19 January, the company outlined its 2023 mine operations plan, detailing the transition to long hole open stoping (LHS) within the mine.
As announced on 27 March, the 430 West Ore drive development was halted in late February due to declining gold grades. As a result, the business shifted mine development priorities elsewhere underground, but production for the first quarter was "severely impacted", totalling just 758 ounces of gold for the period.
LHS commenced 5 April and has been progressing in line with the original plan. To date, 2,906 tonnes of ore have been delivered for processing since LHS began.
Gold concentrate production steadily increased during the second quarter, with a total of 1,556 ounces of gold being produced, of which 818 ounces was attributed to June. The first half saw total gold production of 2,314 ounces.
Second quarter gold concentrate shipments totalled 269 tonnes, with a sales value of £2m and first half gold concentrate shipments totalled 437 tonnes, with a sales value of £3.5m.
Scottish gold doré sales made to Scottish jewellery companies during the first half totalled £183,478.
As for financing, £5m was raised during the first half to support delivery of the 2023 mine plan, to procure a definition drill rig, and for additional working capital, as Cononish continues to be developed towards full production.
The group held £620,000 of cash as at 30 June.
"The ability of the group to continue as a going concern over the long term will remain dependent on the quantity and grade of ore mined and processed being within a reasonable tolerance of the forecast quantity and grade and adherence to the previously planned product shipment schedule," read the stock exchange statement.
Interim chief executive Sean Duffy said: “H1 2023 has been disappointing in terms of gold production and development of the underground mine at Cononish.
“The impact of the declining of gold grades in the 430 West Drive, late February was significant and evident in the resultant production figures for the period.
“Notwithstanding these difficulties, LHS has progressed in line with our plans and I want to thank our dedicated team for working safely and tirelessly to deliver this, with Q2 2023 production being steady and increasing as a result.
“We have begun a mine plan review following reconciling Cononish’s mine development and production over the past six months,“ he added. “This review will allow us to recalibrate our current 2023 mine plan to best optimise LHS going forward as we continue to develop the mine with a view to achieving full production in the long-term.”
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