(Alliance News) - Scotgold Resources Ltd on Wednesday said gold production from the Cononish project in the Scottish Highlands is now expected in February and not December following design delays.
The delay was due to the processing plant building being behind schedule after encountering civil engineering design issues. Scotgold said Cononish's elevation and other environmental factors necessitated more complex earthworks designs than initially expected.
The company said, however, that mine development is on track with access to ore expected by the end of 2019.
Scotgold said restimated design and operational costs indicated a revised funding requirement of GBP2.5 million. As a result, the company has extended its loan with Bridge Barn Ltd by GBP1.5 million and has raised GBP1.2 million through a share subscription.
The loan facility with the Bridge Barn, which is owned by Scotgold's Chair Nathaniel Le Roux, is now at GBP7.5 million and has a non-compounded interest rate of 9.0%.
It will be withdrawn in four separate tranches, three worth GBP2.0 million and a fourth worth GBP1.5 million. The loan is payable 36 months after the withdrawal of each portion of funding.
Over GBP950,000 from the subscription of 3.3 million shares at 35.00 pence each has come from three company directors, Scotgold said.
Non-Executive Directors Peter Hetherington, William Styslinger and Ian Proctor all purchased shares. Jason Saint, a project manager at the firm, also subscribed.
Hetherington subscribed to 857,143 shares at GBP300,000 altogether, taking his holding to 4.1 million shares, 8.4% of Scotgold.
Styslinger subscribed to 928,571 shares for a total of GBP325,000 and now holds 5.6 million Scotgold shares, representing a 12% holding in the company.
Proctor subscribed to 428,571 for GBP150,000 altogether, he now holds 1.2 million shares in the company, 2.4% of Scotgold.
Saint's subscription of 571,428 shares totalled GBP200,000, he did not have any holding in the company prior to the transaction.
The firm also re-calculated Cononish's life of mine project return, upping estimated earnings before interest, taxes, depreciation and amortisation to GBP146.7 million from GBP101.1 million.
The initial GBP101.1 million figure was from a 2017 bankable feasibility study which forecast gold prices at GBP920 per ounce. The updated calculation assumes gold prices are GBP1,200.
Shares in Scotgold were down 9.0% at 33.20 pence each in London on Wednesday afternoon.