Scotgold Resources Limited, which owns the Cononish Gold and Silver Mine near Tyndrum, announced it is undertaking a third party review of the Cononish mine plan for the next 12 months.

The company also said it 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.”

Scotgold shares fell as much as 18% to around 14p to reduce the firm’s stockmarket value to about £11.5 million. The shares have fallen about 75% in 2023.

On its financing, Scotgold said: “The group held £620k of cash as at 30 June. The $500k advance received from MRI remains outstanding, with the first repayment of $100k scheduled to be deducted from the next shipment on 11 July 2023.  

“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.

“This schedule is being reviewed as part of the third-party review of the mine plan commissioned by the company.”

Scotland’s first commercial gold producer also provided results for the three months and six months ended June 30, 2023, from Cononish.

The firm said: “On 19 January 2023, the company outlined its 2023 mine operations plan. This plan was based on its then current grade control model and included limited resource definition drilling information undertaken in 2022. Central to the 2023 mine operations plan was the transition to long hole open stoping (LHS).

“As announced on 27 March 2023, the 430 West Ore drive development was halted in late February due to declining gold grades. As a result, the company shifted the mine development priorities on 3 March 2023 to the 415 East ore drive. In parallel, plans commenced to bring forward LHS to begin early April to secure the short to medium term production profile at Cononish.

“LHS commenced 5 April 2023 and has been progressing in line with the LHS plan. To date, 50m (2 stoping blocks) of the 115m strike length has been completed with 2,906 tonnes of ore being delivered to the ROM pad for processing since LHS began. Stoping block 2, which produced 950 tonnes of ore at an average gold grade of 11.6g/t, was above forecast grades for block 2 of 10.4g/t of gold.  

“As a result of the 430 West Ore drive development being halted, production for Q1 2023 (1 January to 31 March 2023) was severely impacted, totalling 758 ounces of gold for the period …

“Q2 2023 gold concentrate shipments totalled 269 tonnes with a sales value of £2.0m and H1 2023 gold concentrate shipments totalled 437 tonnes with a sales value of £3.5m.

“Scottish gold doré sales made to Scottish jewellery companies during H1 2023 totalled £183,478 …”

Scotgold Resources Interim CEO 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.

“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.”