First gold expected from Scottish mine before December

● Scotgold to use cashflow for expansion ● Strengthens team with two key hires

Scotgold Resources, the company behind the development of a precious metals mine near Tyndrum, expects to produce the first gold from the site within weeks in a move which will pave the way for further exploration of its interests in Scotland.

In a stock market update yesterday, the Aim- quoted company said construction work at the Cononish site – which was abandoned in 1997 after gold prices slumped – was progressing well and that it expects to start production by 30 November.

Scotgold is also beefing up its geoscience team to “unlock t he p ot e nti al” of t he area around Cononish as well as in the other areas it is looking to explore at locations including Glen Orchy, Glen Lyon and the Ochils.

Chief exec ut i ve Ri c hard Gray said: “Our objective is to use the cash flow generative platform which Cononish is expected to provide to build a highly profitable, low- risk gold mining company operating in stable jurisdictions.”

I n addition t o Cononish, Scotgold’s interests include t he Grampian exploration project made up of 13 option agreements with the Crown Estate Scotland, across an area of just under 3,000 square kilometres.

The geoscience team has b e e n e x p a n d e d wi t h t h e appointment of Dr Simon Dominy and David Catterall as group manager resources and reserves and exploration consultant respectively. Dominy is a mining geologist and engineer with experience of mines similar to Cononish, which lies within Loch Lomond and the Trossachs National Park.

Catterall is a geologist with more than 30 years’ experience in the sector with expertise in structural mapping and interpretation, geochemistry and geophysics.

Gray said: “The depth of our geological understanding of both Cononish and the Dalradian belt is obviously key to our long- term success and with these appointments, we are building a world- class geoscience team to unlock the fantastic potential of this whole area and our significant land holdings in particular.”

House broker SP Angel welcomed the update and has also increased its forecasts for the company based on r ecent strong gains seen in prices of precious metals including gold, and the uncertain economic backdrop.

Analysts said the company was on course to bring the Cononish Gold and Si l ver Project into production “at what turns up to be the best possible time”.

“We are updating our earnings estimates to reflect the latest run in precious metals prices as markets brace for expanding fiscal and monetary stimulus while climbing new daily coronavirus cases continue to weigh on economic outlook,” they said.

It puts a valuation of 141p on Scotgold shares, up from 119p, and compared to last week’s levels of around 97p.

At full capacity, the Cononish mine is expected to produce about 23,500 ounces of gold a year.