Shares of Scotgold Resources Limited, which owns the Cononish Gold and Silver Mine near Tyndrum, fell almost 70% on Monday after it said it is “in advanced discussions with its gold offtake partner to secure a US$500,000 advance to assist with short-term working capital.”
Scotgold said in a stock exchange statement its directors have also discussed, if the need arises, “providing a short-term convertible loan as a measure to ensure the company continues with the long hole stoping deliverables as updated in this release.”
The company also said it has become aware that “the email accounts of the executive directors have been accessed by unauthorised persons and specious emails sent in their names to numerous people.”
Scotgold said: “Whilst we believe the vulnerability has been fixed it is impossible to ever be certain of this. The police have also been informed on this matter and will continue to investigate.”
Scotgold shares fell almost 70% to around 12p, reducing the firm’s stock market value to about £8 million.
In an “Operational and Corporate Update” the company said: “The company’s management team continuously assess the cash position of the company.
“As a result of recent mining performance being below plan, largely due to lower than expected grades in the 430 West ore drive resulting in the subsequent decision to bring forward long hole stope mining, the directors now believe that, in the event that the planned commencement of long hole stoping in April is delayed, or the anticipated tonnes of ore mined in April and the following months is significantly below the current mine plan, then a material uncertainty would exist that casts significant doubt over the ability of the consolidated entity to continue as a going concern in the very immediate term and therefore its ability to realise its assets and discharge its liabilities in the normal course of business.
“In order to safeguard against this potential shortfall in working capital over the next few months the directors have determined to take steps to strengthen the company’s cash position.
“The company is in advanced discussions with its gold offtake partner to secure a US$500,000 advance to assist with short-term working capital.
“The directors of the company have also discussed, if the need arises, providing a short-term convertible loan as a measure to ensure the company continues with the long hole stoping deliverables as updated in this release.
“The ability of the consolidated entity 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 planned product shipment schedule.”
On its operations, Scotgold said: “In January 2023 mine development focussed on the 430 West ore drive, 415 East ore drive and the incline ramp accessing the 445 level.
“January’s development rates continued to improve and was a record month with 3,003 tonnes of ore mined, and 2,620 tonnes of ore fed to the process plant. Average grade of the ore processed was lower than predicted (5.65g/t actual vs 7.35g/t planned of gold).
“In February 2023, development on the 430 West ore drive continued on ore for an additional 35 metres beyond design increasing the strike length of the stoping panel above CAF 1 by 45 metres, with the total panel now 115m in length.
“Per the 2023 mine operations plan, the 430 West ore drive was expected to deliver ore continuously as it progressed towards and on top of CAF2 as this CAF area previously provided high gold grades above 10-12g/t in 2022.
“However, as the 430 West ore drive progressed in late February and into early March 2023, gold grades began to decline significantly, and the 430 West ore drive turned to waste, contradicting the grade control model. Total ore production in February was negatively impacted, with actual 977 tonnes mined and 1,441 tonnes processed.
“As a result of the 430 West ore drive turning to waste and the need to focus on ore production, the company shifted development priorities on 3 March 2023 to the 415 East ore drive.
“In parallel, plans commenced to bring forward long hole stoping to early April to secure the short to medium term production profile and enhance gold production thereafter.”