Scotgold Resources Limited said it has completed the majority of optimisation initiatives at its Cononish gold and silver mine in Scotland.
Third-quarter production is likely to be lower than expected due to the successful, but delayed, commissioning of underground power and ventilation upgrades, but the company said optimisation work means that the fourth quarter should be “significantly ahead” of the third and second quarters and meaning that the optimisation phase production run rate of circa 16,000 ounces for the year of gold will be achieved.
For the three months to September 30, 2022, around 2,000 ounces of gold is expected, versus previous guidance of 2,900-3,500 ounces, as the power and ventilation work delayed mine development on the waste ramp which allows access to part of the mine.
But the AIM-listed company, which sold 214 tonnes of gold concentrate in July and August gold for £2.6mln, said with these underground power and ventilation upgrades as well as debottlenecking of the process plant completed, throughput has increased by a third to around 4,000 tonnes of feed per month.
Fourth-quarter production is expected to be in line with the mine plan, which it said was a significant step towards achieving Phase 2 annual production levels of 23,500 ounces of gold as planned by end of the first quarter of 2023.
The power and ventilation upgrades were designed to improve access, operations and increase mining rate and ore extraction, and were completed in late August.
Debottlenecking, which was focused on process plant areas, such as flotation and tailings filtration, was completed, which Scotgold said enhanced gold recoveries and efficiencies beyond management's initial expectations.
Processing of feed is now anticipated to be further improved to around 5,000 tonnes per month by the installation of a tailings thickener in the processing plant, which it said was “well underway”.
Planned commissioning has been moved to the final quarter to “enable smooth implementation inline with increased throughput of ore from the debottlenecking initiative”.
Scotgold chief executive Phil Day said process plant throughput will increase again to circa 6,000 tonnes per month with further optimisation of the plant in the fourth quarter.
He hailed the achievement of commercial production in July and said the company continues to operate as a cash-generative business.
“I am hugely encouraged by progress to date, which sees the majority of optimisation initiatives completed, strongly placing us for Q4 2022 and Q1 2023, driving the production ramp up towards Phase 2, and indeed margins, cash generation and profitability, in line with our stated strategy," Day concluded.