Shares in mining firm Scotgold Resources leapt by more than 14% in early trading on Tuesday after a new report significantly increased the estimated precious metals resource at the company’s main Scottish site.
The new ore reserve estimate for the Cononish prospect near Tyndrum in the Loch Lomond and Trossachs National Park was carried out by Bara Consulting and was the first reappraisal of the site since 2013.
The new estimate has increased the ore reserve by 179% from the level indicated two years ago, with gold deposits now estimated at 198,000 ounces, and silver at 851,000 ounces.
The uprating allowed Scotgold to increase the expected lifespan of the mine to about eight years at a processing rate of 72,000 tonnes per annum.
It has also allowed it to increase estimated annual gold production to approximately 23,000 ounces per year.
The uprating of the resource was welcomed by investors yesterday as the company’s stock took a double-digit spike.
The Cononish mine has been on the planning board for several years, and changes in the wider economic environment prompted a rethink on how it should be taken forward.
Scotgold said it has completed a new mine design and production schedule for the site.
The results of a separate “bankable” feasibility study, which will update capital and operating cost estimates and incorporate targeted savings, is expected to be published by the end of July.
Scotgold chief executive Richard Gray said the company was now moving ahead with renewed confidence. “We continue on track to deliver the Cononish Project into production,” he said.
“I believe this ore reserve statement highlights the robustness of the project, even using a gold price of US$1,100/ounce, some US$100 below the current market price.
“This improved confidence is a material factor in our early stage discussions with potential financiers and will assist us to secure the best possible financial arrangements in the coming months.”