Scotgold chooses 'phased project' development for Cononish

Scotgold announced on Wednesday that an update to the bankable feasibility study for the Cononish Gold and Silver Project, dated August 2015, had been completed by Bara Consulting, which mainly evaluated the economic impact of a range of technical development options and the current economic environment.

The AIM-traded firm said that as a result, the ‘phased project’ development option had been selected as the most favourable overall, incorporating a number of key changes.

Those changes included improved economic returns due to both the change in the tailings storage facility design and a higher assumed gold price of £920 per ounce.

It said the peak funding requirement had reduced to £7.4 million from £18.5m, and the life of mine EBITDA had increased to £100m from £67m.

The development schedule was now designed in two phases, with the first phase at 3,000 tonnes per month and the second phase at 6,000 tonnes per month.

The tailings storage facility was also now designed using a ‘dry stack’ system.

A new planning application would now be required for the revised development plan, and the company has commenced the pre-application consultation process with the Loch Lomond and the Trossachs National Park Planning Authority.

It anticipated that the full planning process should be completed by the end of 2017.

The company has also been granted an extension to the bulk processing trial, and it anticipated that would continue to contribute to the company's working capital requirements through 2017.

Scotgold also agreed a £1m loan facility with its chairman, Nat le Roux, which it anticipated would provide sufficient working capital for the company to complete the planning application process and, subject to a positive planning decision, implement a funding plan for the development of Cononish Gold and Silver project commencing in Q1 2018.

“t is extremely gratifying that we have managed to use the experience of the BPT to re-engineer aspects of Cononish and add significant value,” said CEO Richard Gray.

“With our improved economic returns and short term funding secured which avoids undue dilution for the existing shareholders, we now look forward to securing an attractive full financing package and subject to permitting, putting our mine into production at the earliest opportunity.”