- Record gold production
- Commercial production achieved
- Targeting increase in output
Scottish precious metals miner Scotgold (SGZ:AIM) achieved the key milestone of commercial production from its Cononish gold and silver mine.
The shares gained 8.9% on the news to 79p, taking its gains for the last 12 months to more than 40%.
The company’s second quarter update revealed gold concentrate shipments of 415 tonnes with a sales value of £5 million - and this was 79% of the total for the whole first half of 2022.
Shipments for the six-month period as a whole totalled 551 tonnes with a value of £6.3 million. Gold production itself was 3,531 ounces, up 188% on the first quarter and ahead of previous guidance of 2,600 to 3,200 ounces.
Critically cash flows generated from the mine exceeded the company’s costs. The company’s guidance on output for the third quarter looks reasonably conservative, given it is continuing work to increase production, at 2,900 to 3,500 ounces of gold.
RECORD PRODUCTION AND AMBITIOUS TARGETS
Chief executive Phil Day commented: ‘This has been our strongest quarter yet for Scotgold, characterised by record gold production which exceeded guidance, record gold sales translating into significant cash generation and continued progress on the ground to meet our production and operational targets.
‘Furthermore, with our 2022 mine development work, we continue to move rapidly towards phase two production levels of 23,500 ounce run rate of gold.’
Analyst at house broker Shore Capital, Sheldon Modeland, said: ‘Record gold production and achieving commercial production during Q2 2022 is proof that Scotgold’s optimisation plans are working.
‘We note that Scotgold’s targeted all-in-sustaining cost (AISC) is £544 per ounce at full production, which would be one of the lowest cost producers.
‘As such, whilst Scotgold is a small producer, it has one of the highest grades and margins compared with other gold producers, which we believe the market has not yet fully appreciated.’
