2 Jul 2012 10:53
Scotgold Resources Limited ("Scotgold" or the "Company")
Pre Development financing for the Cononish mine agreed with RMB Resources
Scotgold Resources Ltd ("Scotgold" or the "Company") (ASX:SGZ, AIM:SGZ) is pleased to announce that agreement has been reached with RMB Resources ("RMB") for a £1.18m financing (the "Facility"). This will provide funds to allow Scotgold to take the Cononish gold project in Scotland through to its final development decision. In particular the Facility will enable Scotgold to continue drilling at Cononish with a view to improving confidence 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.
The Facility is a convertible loan structured as a secured corporate loan facility with share options which provides 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 has approved the Facility subject to the satisfactory completion of legal due diligence and documentation.
In addition to the Facility agreement, Scotgold has agreed to mandate RMB to arrange a gold pre payment facility to 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.
Planning permission for the Cononish Project was granted in October 2011, subject to the completion of legal agreements and outstanding conditions. These were concluded in February 2012 and confirmation of the Crown Lease was received in May 2012. Scotgold commenced infill drilling into the Inferred Resource at Cononish in January 2012. An initial phase of 8 holes has been completed and results are awaited. A further phase comprising up to 9 holes will be commenced shortly and drilling is expected to be completed by October 2012. Subsequent to drilling, the results will be incorporated into a revised Resource Estimate and the recently completed 'Cononish Project Development Plan' (see Press Release 17th April 2012 - Positive Results for Cononish Project Development Study) will be updated with the revised Resource Estimate. It is anticipated a final production decision will be made in January 2013, with a start of development on the project in March 2013.
John Bentley, Executive Chairman of Scotgold, commented "This facility and the endorsement of a bank of RMB's standing puts Scotgold in a position to bring the Cononish gold project into production with an optimum mix of debt and equity thereby enhancing shareholder value. The terms of the pre payment facility have been substantially agreed but final pricing and the extent of the debt capacity will depend upon the final Resource Estimate and the gold price at the time the loan receives credit approval from RMB. It is currently anticipated that approximately 50% of the development costs for the mine may be provided by debt finance".
Enquiries to:
United Kingdom:
Scotgold Resources Limited | Westhouse Securities Limited | Bankside Consultants |
John Bentley (Chairman) Tel: +44 (0)1838 400306 Chris Sangster (CEO) | Richard Baty / Petre Norton | Simon Rothschild / Elena Kuza |
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) 9428 2950 Mobile: +61 (0) 411 704 498 | Tel: +61 (8) 9388 0944 Mobile: +61 (0) 401 802 210 |
Notes to Editors
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 1 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 3200 km2 covering the highly prospective Dalradian terrain across the south west Grampians.
Table 1:
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
About RMB
RMB Resources is the global resources merchant banking business of the FirstRand group, one of the largest financial services groups in South Africa. The company focuses on providing equity, quasi-equity and debt financing to small to mid-size mining and exploration companies.
About LN Metals
LN Metals is a London based global physical merchant and agent operating in the non-ferrous, and minor metal markets and has an advisory business that delivers specialist services to the junior and mid-tier mining sector. LN Metals is 47% owned by RMB Australia Holdings Limited.