LONDON (Alliance News) - Scotgold Resources Ltd Friday said it can now proceed with its planned bulk processing trial of stockpiled ore at its gold and silver project in Scotland after securing approval from authorities, adding the first quarter of 2016 was "exceptionally busy" on both a corporate and technical front.
Planning permission was awarded by the Loch Lomond and the Trossachs National Park Planning Authority but is subject to certain conditions, primarily related to hours of work, duration of trial, environmental and visual impacts, remediation, monitoring and reporting, the company said.
"With this permission now in place, the bulk processing trial can proceed with on site activities and the company expects to release further news on this in the coming weeks," said Chief Executive Richard Gray.
Scotgold is pushing ahead with the trial programme at the Cononish gold and silver project by installing a pilot plant to treat an existing stockpile of ore, but has previously conceded the trial will not be enough on its own to bring the project into commercial production.
"This has been an exceptionally busy quarter for the company. Technically, moving forward with the bulk processing trial is providing tangible progress towards the full development of the Cononish gold and silver project," said Company Secretary Gabriel Chiappini. "Corporate activity this quarter has also significantly strengthened the company."
The miner has a stockpile of around 7,000 tonnes of ore graded at around 7.9 grammes of gold per tonne, which will be processed using a GBP140,000, small scale pilot plant that should be capable of treating around 2,400 tonnes of that ore within the first six months.
Although the trial will not be enough to push the project into commercial operations, it will demonstrate the marketability and profitability of Scottish gold production from Cononish and provide further confidence to metallurgical test-work already completed.
Importantly, Scotgold has already completed a bankable feasibility study on Cononish, and the trial will provide a basis for a review of the current development plan which has been derived from that study.
Essentially, the trial will give Scotgold, which has not ever been a producer, valuable experience and also generate sales to provide funds to help finance further development at the project.
The ore that will be treated under the trial programme forms part of Scotgold's probable resources.
On the corporate front, Scotgold's placing earlier this year raised GBP630,000 to bolster the company's balance sheet, providing capital to allow the existing bankable feasibility study to be revised if needed.
Scotgold said its cash balance at the end of March amounted to AUD1.1 million, rising from AUD874,302 at the end of 2015.
"In addition to providing additional funds, the corporate activities have also strengthened the company's balance sheet by reducing debt and demonstrate the continuing confidence and support of the chairman and chief executive officer. The company is reviewing further corporate initiatives to both simplify its structure and save costs," said Chiappini, who took up the role at the end of 2015.
Scotgold said it expects cash outflow in the second quarter of 2016 to amount to around AUD425,000, of which AUD250,000 will be spent on exploration and evaluation work whilst the remaining AUD175,000 will be related to administrative costs.
Scotgold shares were trading down 1.2% to 0.766 pence per share on Friday afternoon.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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