1 Nov 2012 07:00
Scotgold Resources Limited ("Scotgold" or the "Company")
SEPTEMBER 2012 QUARTERLY REPORT
HIGHLIGHTS
Cononish Gold and Silver Project
·; Infill drilling completed and results received over western section
·; Drilling on-going to further infill portions of Inferred Resource in eastern section
·; Update to resource estimate commenced
·; Pre development funding with RMB Australia Holdings Ltd concluded
Cononish Gold and Silver Project
Infill Drilling Program Results
Scotgold re-commenced infill drilling at Cononish in January 2012. The drilling program was aimed at converting inferred resources to indicated resources in that part of the resource that will be mined in the early years of the mine life, thereby enhancing the debt capacity of the project.
Results
A total of fourteen holes were drilled (including one in 2010) into the western portion of the Inferred Resource. Final results from the whole program are shown in Table 1 and Figure 1 below.
Table 1 - Infill drilling results (2010 - 2012) - West Raise Area
Hole Number | From (m) | To (m) | D/H Width (m) | Est. true thick (m) | Au g/t | Ag g/t |
CF 12 - 01 | 112.46 | 114.77 | 2.31 | 2.0 | 13.95 | 47.6 |
CF 12 - 02 | 105.05 | 107.67 | 2.62 | 2.4 | 14.21 | 39.7 |
CF 12 - 03 | 125.00 | 130.42 | 5.42 | 3.3 | 27.21 | 44.1 |
Con 10 - 05 | 79.15 | 83.00 | 3.85 | 2.1 | 14.82 | 55.5 |
CF 12 - 04 | 107.00 | 112.60 | 5.60 | 3.8 | 14.90 | 40.8 |
CF 12 - 05 | 109.42 | 113.16 | 3.74 | 3.3 | 1.30 | 11.6 |
CF 12 - 06 | 112.35 | 115.66 | 3.31 | 2.6 | 27.43 | 68.6 |
CF 12 - 07 | 104.87 | 106.92 | 2.05 | 1.9 | 5.24 | 37.2 |
CF 12 - 08 | 110.21 | 112.60 | 2.39 | 2.2 | 2.05 | 15.7 |
CF 12 - 09 | 64.05 | 69.02 | 4.97 | 2.4 | 22.47 | 45.9 |
CF 12 - 10 | 66.98 | 69.88 | 2.90 | 1.3 | 9.84 | 35.7 |
CF 12 - 11 | 74.67 | 76.86 | 2.19 | 1.40 | 3.9 | |
CF 12 - 12 | 83.89 | 86.37 | 3.27 | 2.42 | 13.4 | |
CF 12 - 13 | Abandoned | |||||
Drill statistics are shown in Appendix A
The results from this program will shortly be incorporated in an updated Resource Statement to be completed by Snowdens Mining Industry Consultants Ltd (Snowden).
The updated Resource Statement will form the basis for the definitive mining plan and the Cononish Project Development Study to be completed under the auspices of Australian Mining Consultants UK Ltd (AMC). The Company will then be in a position to determine the optimum debt capacity of the project.
It is anticipated that this work will be complete in early 2013 and subject to concluding financing arrangements, the Company envisages a project go-ahead decision in April 2013 with a start of construction in June 2013 with first gold production early in 2014.
Figure 1
An illustration showing the location of the drill holes can be found on Scotgold's website at www.scotgoldresources.com under ASX announcements.
Drilling has also commenced in the Eastern Section of the Inferred Resource with 5 holes planned and an initial hole completed.
Financing
The Company concluded a pre development funding agreement with RMB Resources ("RMB") for a £1.18m financing (the "Facility").
The Facility is a convertible loan structured as a secured corporate loan facility with share options which provide for RMB to acquire Scotgold shares at a cost equal to the value of the loan if all the options are exercised. The strike price for the RMB options is £0.045.
The Facility will be repaid on the earlier of the date that equity or debt funds are available or 31 December 2013. The annual interest rate for the Facility will be Libor plus 5%.
The Facility has been arranged by RMB and will be provided by RMB Australia Holdings Limited. RMB's investment committee approved the Facility subject to the satisfactory completion of legal due diligence which was concluded on 27 July 2012.
In addition to the Facility agreement, Scotgold has agreed to mandate RMB to arrange a gold pre payment facility to part fund the development of the Cononish gold project. Scotgold has also agreed to mandate LN Metals International Ltd to market the gold-in-pyrite concentrate which will be produced at Cononish to end consumers.
EXPLORATION UPDATE - GRAMPIAN GOLD PROJECT
The Company continues to actively pursue exploration activities on its substantial land position of some 4,200km2 in the south west Grampians of Scotland.
Regional fieldwork including ongoing stream sediment sampling continued over the Inverliever, Cononish / Glen Orchy and Glen Lyon option areas.
Initial field visits were conducted to the Knapdale and Ochil option areas.
AQ drilling was carried on a vein structure to the south of the Cononish vein and results are awaited.
For further information please contact:
United Kingdom:
Scotgold Resources Limited | Westhouse Securities Limited | Bankside Consultants |
John Bentley (Chairman) Chris Sangster (CEO)
| Richard Baty / Petre Norton | Simon Rothschild / Harry Gourlay |
Tel: +44 (0)77 2562 9509 | Tel: +44 (0)20 7601 6100 | Tel +44 (0)20 7367 8888 |
Australia:
Scotgold Resources Limited | Professional Public Relations |
Shane Sadleir (Non-Executive Director)
| Belinda Newman |
Tel: +61 (8) 9222 5850 Mobile: +61 (0) 411 704 498 | Tel: +61 (8) 9388 0944 Mobile: +61 (0) 401 802 210 |
Competent Person's Statement:
The information in this report that relates to Exploration Results is based on information compiled by Mr. David Catterall. Pr Sci Nat, who is a member of the South African Council for Natural Scientific Professions. Mr. Catterall is employed as a consultant to Scotgold Resources Ltd. Mr. Catterall has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Catterall consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Forward Looking Statements:
This release includes certain "forward looking statements." All statements, other than statements of historical fact, are forward looking statements that involve various risks and uncertainties.
There can be no assurances that such statements will prove accurate and actual results and future events could differ materially from those anticipated in such statements.
Appendix 1 Drill statistics
Hole No. Easting Northing Altitude Dip Azimuth EOH Core CF 12-01 228690 728043 538 -50 317 126.6 NQ CF 12-02 228690 728043 538 -41 319 121.9 NQ CF 12-03 228690 728043 538 -55 314 139.4 NQ CF 12-04 228690 728043 538 -45 305 122.9 NQ CF 12-05 228690 728043 538 -35 297 123.1 NQ CF 12-06 228690 728043 538 -45 294 135.7 NQ CF 12-07 228690 728043 538 -45 330 129.2 NQ CF 12-08 228690 728043 538 -30 295 124.2 NQ CF 12-09 228569 728008 542 -50 348 77.6 NQ CF 12-10 228569 728008 542 -63 330 85.2 NQ CF 12-11 228569 728008 542 -63 275 95.5 NQ CF 12-12 228569 728008 542 -67 260 104.1 NQ CF 12-13 228569 728008 542 -72 250 168.3 NQ CON 10-05 228641 728089 565 -77 327 91.7 NQ |
Background
About Scotgold
Scotgold Resources Ltd is a mining exploration and development company listed on the Australian Securities Exchange (ASX) and the AIM market of the London Stock Exchange (AIM). The Company's principal asset is the Cononish gold and silver project situated near Tyndrum in the Scottish Grampians.
The current resource for the project, estimated in accordance with the JORC code, stands at 163,000 ozs Au and 596,000 ozs Ag in the Measured, Indicated and Inferred categories (estimated using a 3.5g/t cut off) (see Table 3 below for breakdown).
Planning approval for the development of an underground mine at Cononish has been granted and Australian Mining Consultants (UK) Ltd has completed a development study which demonstrates that the project is commercially attractive with a cash operating cost of around US$575/oz.
The Company also holds Crown exploration licences over some 4,200 km2 covering the highly prospective Dalradian terrain across the south west Grampians.
Table 3:
Cononish Main Vein Gold Mineral Resources (reported at a 3.5 g/t Au cut-off).
Reported using the 2004 JORC Code (JORC, 2004). Tonnages and contained ounces rounded to the nearest 1,000 t or 1,000 oz. Grade rounded to the nearest 0.1 g/t Au. The Inferred Resource grade is reported with a grade range to indicate the likely upside due to the information effect.
Classification | Tonnes (t) | Grade (g/t) | Ounces (oz) |
Gold | Gold | ||
Measured | 53,000 | 17.9 | 31,000 |
Indicated | 73,000 | 10.2 | 24,000 |
Inferred | 311,000 | 10.8 (10 - 16) | 108,000 |
Scotgold Note: Incorporating the grade range, the Inferred Mineral Resource is estimated to lie between 100,000 oz Au and 160,000 oz Au. It should be noted that any upside may not exist or it may only be present in a portion of the resource.
Cononish Main Vein Silver Mineral Resources (reported at a 3.5 g/t Au cut-off).
Reported using the 2004 JORC Code (JORC, 2004). Tonnages and contained ounces rounded to the nearest 1,000 t or 1,000 oz.
Classification | Tonnes (t) | Grade (g/t) | Ounces (oz) |
Silver | Silver | ||
Measured | 53,000 | 75.0 | 128,000 |
Indicated | 73,000 | 43.1 | 101,000 |
Inferred | 285,000 | 40.1 | 367,000 |
Competent Persons Statement:
The Information in this report that relates to Mineral Resources is based on resource estimates compiled by EurGeol Dr S C Dominy FAusIMM (CP), FGS (CGeol), FIMMM (CEng), FAIG (RPGeo), Executive Consultant with Snowden based in the Ballarat, Australia Office. Dr. Dominy has sufficient experience that is relevant to the style of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore reserves. Dr Dominy consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.