TIDMSGZ
RNS Number : 1731S
Scotgold Resources Ltd
28 September 2017
SCOTGOLD RESOURCES LIMITED
ANNUAL RESULTS FOR THE YEAR TO 30 JUNE 2017
Scotgold Resources Limited ("Scotgold" or "the Company")
(ASX:SGX) (AIM:SGZ), which is focused on the development of its
advanced stage Cononish gold and silver project in Scotland
(Cononish Project) announces its final results for the year ended
30 June 2017.
The Company reports a reduced loss for the year of AUS
$1,348,167 compared with the prior year of AUS $1,505,592.
Sales of gold and gold concentrates, and increase in gold
concentrates' inventory during the year amounted to 258 troy ounces
(2016 - 12 troy ounces) and, before costs, have reduced deferred
mineral and exploration expenditure by AUS $582,111 (2016 - AUS
$26,993).
At balance date, the Company has AUS $572,332 in cash and cash
equivalents (2016 - AUS $738,866, and holds gold in concentrates'
inventory with a net realisable value of approximately AUS
$222,000.
The Directors are currently working with their appointed
investment banking advisers on sourcing funding for the Cononish
Project from debt and private equity providers and are hopeful of
progress being made in this regard. The Directors are nevertheless
also mindful of the short and medium term working capital needs of
the Company and may need to consider addressing these separately in
the light of the timing of the completion any project finance
transaction for the Cononish Project.
The Company's full annual report for the year to 30 June 2017 is
now available on the Company's website. The financial information
set out below is not the audited results but has been extracted
from them. In addition to the audited financial results for the
year, the Annual Report contains an Operational Review that is
based on the operational updates that have been made by Scotgold
and contains no new material information.'
For further information please contact:
Scotgold Resources Stockdale Securities Capital Markets Smaller Company
Limited Limited Consultants Capital
Ltd
------------------- --------------------- ----------------- ----------------
Richard Gray Robert Finlay/ Simon Rothschild Rupert Williams
- CEO Ed Thomas
------------------- --------------------- ----------------- ----------------
Tel: +44 (0)1838 Tel: +44 (0)20 Tel +44 (0)7703 Tel: +44 (0)20
400 306 7601 6100 167 065 3651 2911
------------------- --------------------- ----------------- ----------------
OPERATIONS REVIEW
CONONISH GOLD AND SILVER PROJECT
During the year ended 30 June 2017, the Company has continued
the operation of its Bulk Processing Trial. The major highlights
from this trial have been:
-- Production of the first commercially produced Scottish gold;
-- Auction sale of ten individual, one fine troy ounce, rounds
of first ever commercially produced Scottish gold realising gross
proceeds of GBP45,579.03. And subsequent sales of gold in
concentrate, based upon spot prices;
-- Establishment of a premium market for sale of genuine Scottish, hallmarked gold;
-- Establishment of a route to market for sale of Cononish gold
in pyrite concentrates and gold rich galena concentrates; and
-- Initiative to revise the Tailings Storage Facility for the
mine development, resulting in significant capital expenditure
savings.
The Company continues to pursue project funding alternatives.
Discussions continue with Private Equity groups, Investment Banks,
high net worth individuals, and industry participants.
Subsequent to the release of the bankable feasibilty study (BFS)
completed by Bara Consulting Ltd (Bara) in 2015, the Company
commissioned Bara to evaluate the economic impact of a range of
technical development options given the current economic climate
and ongoing finance discussions. These included the use of 'dry
stack' tailings methodology as a result of the technical
feasibility study carried out by Knight Piesold in 2016/7. The use
of dry stack technology has a number of significant benefits
including:
-- Significantly reduced upfront capital costs, and
-- Improved visual and landscape and other environmental impacts
A number of different scenarios were considered in the study
including:
1. A revised BFS using an updated gold price.
2. A full scale case based on the BFS but using the modified TSF (dry stack).
3. A full scale case but also assuming access to a cyanidation
plant within Scotland. Note this is the only option which
considered cyanidation as opposed to the currently envisaged
sulphide concentrate sale.
4. A half scale case processing at 3,000 tpm for the life of the mine.
5. A phased project where build-up to 6,000 tpm is funded from
the first phase of 3,000 tpm.
The table below shows the assumptions used for each
scenario:
Description Units Original New Options Evaluated
Base
Case
(BFS)
------------------ -------- --------- -------------------------------------------------
Revised Full Full Half Phased
Base Scale Scale Scale Project
Case with
(BFS) Offsite
CN
(1) (2) (3) (4) (5)
------------------ -------- --------- -------- ------- --------- ------- ----------
Physicals
------------------ -------- --------- -------- ------- --------- ------- ----------
Production 3 000
Rate Tpm 6 000 6 000 6 000 6 000 3 000 / 6 000
------------------ -------- --------- -------- ------- --------- ------- ----------
Overall Recovery % 93 93 93 93 93 93
------------------ -------- --------- -------- ------- --------- ------- ----------
Dore Recovery % 25 25 25 25 25 25
------------------ -------- --------- -------- ------- --------- ------- ----------
177 177 176 176 175
Total Au Sold Oz 666 666 074 074 567 175 762
------------------ -------- --------- -------- ------- --------- ------- ----------
Tailings Storage Type Valley Dry Dry Dry Dry Dry Stack
Facility Type Fill Stack Stack Stack Stack
------------------ -------- --------- -------- ------- --------- ------- ----------
Stockpile
Depleted T - - 7 000 7 000 7 000 7 000
------------------ -------- --------- -------- ------- --------- ------- ----------
Construction
Period months 16 16 16 16 16 16
------------------ -------- --------- -------- ------- --------- ------- ----------
Life of Mine
(Including
Construction) Years 9 9 9 9 17 10
------------------ -------- --------- -------- ------- --------- ------- ----------
Economics
------------------ -------- --------- -------- ------- --------- ------- ----------
Gold Price $/oz 1 100 1 150 1 150 1 150 1 150 1 150
------------------ -------- --------- -------- ------- --------- ------- ----------
Silver Price $/oz 15 16 16 16 16 16
------------------ -------- --------- -------- ------- --------- ------- ----------
USD/GBP Exchange
Rate $/GBP 1.60 1.25 1.25 1.25 1.25 1.25
------------------ -------- --------- -------- ------- --------- ------- ----------
Scottish Gold
Sold % 25 25 6.6 6.6 7.4 7.4
------------------ -------- --------- -------- ------- --------- ------- ----------
Scottish Gold
Premium % 0 0 10 10 10 0
------------------ -------- --------- -------- ------- --------- ------- ----------
Discount Rate % 10 10 10 10 10 10
------------------ -------- --------- -------- ------- --------- ------- ----------
Based on the results of the above option study, the Company
decided that the Phased Project scenario was the most favourable
overall under current economic conditions in relation to the
availability of finance.
The table below shows the results for the original BFS and the
Phased Project:
FINANCIAL RESULTS COMPARISON
--------------------------------------------------------
Financial Metric BFS Aug'15 Phased Project
-------------------------- ----------- ---------------
EBITDA (GBP) 67,427,626 100,040,640
-------------------------- ----------- ---------------
Gross Cashflow (GBP) 43,403,552 79,943,378
-------------------------- ----------- ---------------
Net Cashflow (GBP) 35,725,551 67,375,514
-------------------------- ----------- ---------------
Pre-Tax NPV @ 10% (GBP) 22,945,889 42,891,326
-------------------------- ----------- ---------------
Pre-Tax IRR (%) 45 80
-------------------------- ----------- ---------------
Post-Tax NPV @ 10% (GBP) 18,515,172 36,117,874
-------------------------- ----------- ---------------
Post-Tax IRR (%) 41 75
-------------------------- ----------- ---------------
Operating Margin (%) 53 59
-------------------------- ----------- ---------------
Life of Mine (years) 8 9
-------------------------- ----------- ---------------
Gold price / oz $ 1100 1150
-------------------------- ----------- ---------------
Exchange rate $:GBP 1.6 1.25
-------------------------- ----------- ---------------
Gold price / oz GBP 687.50 920.00
-------------------------- ----------- ---------------
Payback Period (months) 19 13
-------------------------- ----------- ---------------
Peak Funding Req. (GBP) 18,452,183 7,419,340
-------------------------- ----------- ---------------
The adoption of this strategy has necessitated a revision to the
existing planning consent and the requisite application was
submitted to the Planning Authority and validated in August
2017.
Details of the material assumptions considered in the derivation
of the production target and forecast financial information above
and the BFS Study Update Executive Summary are provided on
Scotgold's website at www.scotgoldresources.com.
Cononish Mineral Resources
The Mineral Resource Estimate ("MRE") is classified as Measured,
Indicated and Inferred Mineral Resources, (adhering to guidelines
set out in the JORC Code (2012 Edition)), and is reported at a
cut-off grade of 3.5 g/t gold as is presented in the Table below.
The Table also serves as the Company's Annual Mineral Resource
Statement.
Table: Annual Mineral Resource Statement as at 30/06/2017
Cononish Main Vein Gold and Silver Mineral Resources, prepared
in accordance with the JORC code (2012 Edition) and reported at a
3.5 g/t Au cut-off as at 12/01/2015, which remain current subject
to the depletion of approximately 4.5kt from the Indicated
Resources - Mined Stockpile
SCOTGOLD RESOURCES LIMITED - CONONISH GOLD PROJECT
MINERAL RESOURCE ESTIMATE AS AT 12 JANUARY 2015
Reported at a grade cut-off of 3.5g/t gold
-------------------------------------------------------------------------
Classification K tonnes Grade Metal Grade Metal In -
Au g/t koz Ag g/t Ag Koz situ
Dry
BD
---------------- --------- -------- ------ -------- -------- ------
Measured
- In-situ 60 15.0 29 71.5 139 2.72
---------------- --------- -------- ------ -------- -------- ------
Indicated
- In-situ 474 14.3 217 58.7 895 2.72
---------------- --------- -------- ------ -------- -------- ------
Indicated
- Mined
Stockpile 7 7.9 2 39.0 9 2.72
---------------- --------- -------- ------ -------- -------- ------
Sub-total
M& I 541 14.3 248 59.9 1,043 2.72
---------------- --------- -------- ------ -------- -------- ------
Inferred
-In situ 75 7.4 18 21.9 53 2.72
---------------- --------- -------- ------ -------- -------- ------
Total MRE 617 13.4 266 55.3 1096 2.72
---------------- --------- -------- ------ -------- -------- ------
Reported from 3 D block model with grades estimated
by Ordinary Kriging with 15 x 15 SMU local Uniform
Conditioning adjustment. Minimum vein width is 1.2m.
totals may not appear to add up due to appropriate
rounding.
-------------------------------------------------------------------------
Note: Mineral Resources presented above include Ore Reserves
stated below.
There has been no change in the Mineral Resources reported as at
30/06/2016 other than the depletion of the mined stockpile, the
resource will be adjusted on full depletion of the stockpile.
Approximately 4.7kt had been depleted to end June 2017.
An internal review of the Mineral Resource Estimate concluded
that the estimation techniques and parameters employed remained
appropriate.
The Cononish mineralisation remains open at depth down plunge
and to the west along strike. There is therefore potential to add
to the resource by further extensional drilling.
In addition to the currently defined Mineral Resources, Scotgold
believes that there is additional resource development potential
close to the Cononish mine, subject to appropriate and successful
further work. Extensive gold-in-soil anomalies, mineralisation
associated with outcrops and trenching and geophysical anomalies
close to the current resource clearly warrant further follow up. In
addition, there are indications that other reefs are present in the
area too. At this stage, such indications are highly conceptual and
there is no guarantee that further exploration will define
additional Mineral Resources.
Cononish Ore Reserves
As part of initial work towards developing the 2015 BFS, Bara
Consulting Ltd completed a thorough review of the 2013 Cononish
Development plan in order to identify opportunities to not only
improve on the plan but to also improve the confidence in the plan.
As a result of this review, further work was undertaken on the
mining methodology, access design, geotechnical evaluation and
overall mine design.
The outcome of this work was that an Ore Reserve Estimate was
completed on 25 May 2015, in accordance with the JORC code (2012
Edition) based on the Mineral Resource Estimate (MRE) issued in
January 2015. The subsequent addendum to the Bankable Feasibility
Study resulted in no change to the Ore Reserve. Hence there is no
change to the Ore Reserves reported for the project as of
30/06/2016.
An internal review of the Ore Reserve Statement concluded that
the modifying factors used in determining the Ore Reserve remained
appropriate.
Table: Annual Ore Reserve Statement as at 30/06/2017
As at 25 May 2015 (JORC 2012 Code)
------------------------------------------------------
Classification Proven Probable Total
--------------------- --------- ----------- -------
Tonnes ('000) 65 490 555
--------------------- --------- ----------- -------
Au Grade (g/t) 11.5 11.1 11.1
--------------------- --------- ----------- -------
Au Metal (k oz) 24 174 198
--------------------- --------- ----------- -------
Ag Grade (g/t) 51.5 47.2 47.7
--------------------- --------- ----------- -------
Ag Metal (k oz) 108 743 851
--------------------- --------- ----------- -------
(Bara Consulting Limited Ore Reserve Statement
dated May 2015)
------------------------------------------------------
For greater detail on the parameters derived from this work and
used for the Ore Reserve estimation process, refer to the Company's
announcement on 26/05/2015 - Cononish Gold Project Study Update and
Reserve Estimate, and subsequent announcement on 15/03/2017 -
Update to Cononish Bankable feasibility study on the Company's
website.
The ore reserve statement above does not take account of the
depletion of part of the surface stockpile through the BPT. As of
30(th) June 2017, approximately 4.7kt had been removed from the
stockpile and the reserves will be adjusted on full depletion of
the stockpile.
Both the Mineral Resource Estimate and Ore Reserve statement
were compiled by suitably qualified Independent Competent Persons
as identified at the time of their release.
Bulk Processing Trial
In February 2016 the Company announced its intention to
undertake a Bulk Processing Trial" (BPT) at Cononish. The principal
objectives of the BPT were to demonstrate the marketability and
profitability of Scottish gold production from Cononish. It has
also given further confidence to metallurgical test-work already
completed and has provided a basis for a review of the current
development plan under the current Bankable Feasibility Study
especially in relation to the tailings disposal methodology
referred to above.
The planning application for the BPT was approved by the Loch
Lomond & The Trossachs National Park Planning Authority in
April 2016 and a small scale pilot plant was installed and
commissioned by June 2016. Subsequent to the initial phase of BPT
operation, a further application was made to extend the life of the
bulk processing trial in order to complete the surface stockpile
which was granted in February 2017.
The process employed is purely physical by crushing of the ore
and using gravity separation via a centrifugal device to separate
the high grade gold concentrate, similar to the planned full scale
plant. However, the flotation circuit process has been replaced by
a spiral bank to generate a sulphide, gold rich concentrate. This
concentrate is then further upgraded via a shaking table and the
final gold rich output from both the centrifugal device and spiral
are smelted to produce a small quantity of doré (an impure bullion
'bar'). As no chemicals are being used on site as part of the BPT
this gold generated can be classified as "ethical". The majority of
the gold however remains in the sulphide concentrate which for the
purposes of the BPT is sold without further processing.
Metallurgical recovery and unit processing costs in the BPT do not
achieve the planned results of the full scale gravity/float plant
process envisaged in the Cononish Bankable Feasibility Study
however they have given an invaluable confirmation of the
performance of the ore.
The first gold was poured in August 2016 in time for the
official opening attended by local dignitaries and community
representatives. An initial offering of 'Scottish Gold Rounds' from
the first gold produced was well supported with a significant
premium being realised above the spot gold price. Subsequently,
'Scottish' gold produced on site has been sold, again at a
significant premium to spot price, to two well known Scottish
jewellers.
In addition, sales of gold in concentrate have been sold prior
to year-end and are included in the results for the year ended 30
June 2017. A further shipment containing an estimated 100 troy
ounces of gold has been made in August 2017 and further production
of varying grades and quantities is expected to be shipped in early
October and December with a final shipment, containing the final
production from the existing stockpile, expected to be shipped in
early January 2018. Proceeds from sale of concentrates are received
net of off-take commissions, discounts, transport, refining and
treatment charges.
GRAMPIAN GOLD PROJECT
The Company continues to actively pursue exploration activities
on its substantial land position in the Dalradian group of the
south west Grampians, a terrain highly prospective for both gold
and potential base metal occurrences. The majority (85%) of the
area currently under option to Scotgold is located outside the Loch
Lomond and the Trossachs National Park.
Whilst advancing the Cononish project to production, the
Company's strategy has been to conduct early stage regional
exploration over the Grampian Gold project area in conjunction with
follow up work on the more advanced prospects close to the Cononish
project area.
The Grampian Gold project encompasses a large area (4100 km(2) )
of the highly prospective Dalradian sequence. Basic exploration
data, including gravity and airborne magnetics, is available from
government surveys but is of a quality and spacing that does not
adequately reflect the prospectivity of the area. This, and the
general lack of previous exploration over the area (other than
early stage exploration in the vicinity of the Cononish project),
has dictated the Company's approach to exploration.
In order to advance its understanding of the regional setting
the Company embarked on a regional scale stream sediment sampling
program. In an initial wide spaced regional program, in excess of
750 stream sediment samples were taken across the project area.
Interpretation of these results continues and this program has been
followed up by a more detailed infill sampling program in the
anomalous result areas in order to further target areas for
detailed fieldwork and prospecting. To date in excess of 1200
samples have been collected with interpretation of these results
on-going.
In parallel with this regional program, Scotgold continues to
evaluate previously identified high grade outcrop samples
identified by previous exploration close to the Cononish project.
Initially, the Company conducted a re-sampling program to verify
previously identified occurrences and this program confirmed the
presence of a large number of high grade gold / silver vein
outcrops in an area located between two major regional faults, the
Tyndrum - Glen Fyne fault and the Ericht - Laidon fault, and
associated with the fractures generated by movement along these
faults.
Considerable follow up work has been undertaken to examine the
extent of these occurrences through further fieldwork, detailed
rock chip sampling, initial short surface drilling and (in some
cases) deeper diamond drilling and the Company believe that further
significant exploration expenditure is justified on many of these
prospects when financing is available.
Scotgold Resources Ltd engaged the services of Dr. Pablo Gumiel
and Dr. Monica Arias, of Consulting de Geología y Minería, S.L., to
conduct a structural study and initial analysis of Scotgold's
extensive Geographic Information System (GIS) database covering the
Grampian Gold project. The study aimed to develop a structural
model, focused on the Cononish deposit, to improve the
understanding of the evolution of gold and silver mineralisation in
the Tyndrum area. The study then combined the extensive existing
geochemical database with structural data from Drs Gumiel and
Arias' recent fieldwork, using new analytical techniques to assess
various aspects of prospectivity and develop an initial
prospectivity map. The map uses techniques that take account of a
number of geological parameters identified in the study as critical
to locating potential economic mineralisation, including:
-- High grade rock outcrop data
-- Fracture density
-- Typology (characteristics) of the vein structures / systems
-- Other GIS based historic data
Through 3 Dimensional (3D) geological and GIS modelling, a
preliminary prospectivity map was developed for the study area to
identify areas of high priority and potential, using a weighted
gridding method.
Based on the resulting prospectivity map, the study identified a
series of high priority targets, with 6 targets being located
within a 2.5 km radius of Cononish, including 2 targets outside the
Loch Lomond and Trossachs National Park (LLTNP). A further 5
targets have been identified within the studied area, all of which
are outside the LLTNP. Close to the Cononish deposit, Coire Nan
Sionnach and Kilbridge are highlighted as highly prospective, along
with two further parallel anomalies between the Cononish deposit
and Coire Nan Sionnach.
The study has distinguished a number of high priority vein
systems / structures from those less likely to carry economic
mineralisation and indicates high potential for Cononish style
mineralisation in the Glen Orchy option area.
More recently, the Company has conducted a further comprehensive
exploration review on a wider scale to better focus ongoing
exploration across the option areas outside Glen Orchy. This has
involved a review of the lithological setting of known
mineralisation in combination with the structural features
identified in the Gumiel / Arias report to identify potential for
Cononish style mineralization whilst also recognizing that other
styles of mineralisation may be present.
The review has also examined the most appropriate techniques for
the ongoing exploration of the wider Grampian project and has
recommended a number of orientation surveys around Cononish as a
precursor to their application on a regional scale.
PORTUGAL - POMAR PROJECT
In May 2016, the Company announced the acquisition of the Pomar
licence area in eastern central Portugal by its wholly owned
Portuguese subsidiary, Scotgold Resources Portugal Ltda.
The Pomar licence area includes the historic antimony mines of
das Gatas, Pomar and Casalinho, in addition to numerous small scale
trials and occurrences.
Evaluation of styles of mineralization during initial site
visits indicated the potential for undiscovered gold prospects in
zones with quartz-only mineralization in addition to the known gold
bearing felsic dykes traversing the area and potential extensions
to the known antimony occurrences.
Initial exploration has included soil and rock chip sampling and
development of a regional structural model.
Analysis of selected historical soil samples taken have
indicated a long (c.1km) As (Arsenic) / Au (Gold) anomaly along the
kilometric scale felsic dykes in the area. Significant Au / Sb
(Antimony) / As anomalies have also been registered around the old
workings of Das Gatas, Barroca da Santa, Casalinho, Monte da Goula,
and Pomar workings. Statistical interpretation of the samples
indicates a strong correlation between As / Au (for the dykes) and
Au/Sb/As for historic workings and As is indicated as an important
pathfinder for future exploration.
Results from selected rock chip samples taken from various
locations around the old mines, waste tips and certain accessible
outcrops indicate the presence of high grade gold (and some W)
associated with historic antimony veins. Historic samples for Au
along the Felsic dykes need further correlation but their
prospectivity is supported by soil sampling results.
A structural interpretation for the area has been prepared and
postulates the mineralised Sb / Au veins as developing in an
extensional fault roughly trending NS and reactivated as a thrust.
Based on this interpretation, a number of areas around the old
mines warrant follow up to determine the presence of extensions /
repetitions to the know high grade Sb / Au mineralisation.
Further follow up work is planned to follow up the extent of
possible mineralisation associated with the Felsic dykes with an
extended and closer spaced soil sampling program along with initial
trenching / diamond saw sampling of available outcrop to verify
previously taken chip samples. Detailed study of the mineralogy and
paragenesis of the Au occurrences in the dykes will further inform
their prospectivity.
Further work is planned to determine the nature of the high
grade rock chip samples associated with the old workings and tips,
and their possible extensions as postulated by the structural work.
This will initially involve regaining access to and resampling the
old workings.
FRANCE - VRENNES
In May 2017, the Company was granted the 'Vendrennes' Permit
Exclusif de Recherche ("PER") / exclusive exploration licence,
applied for in 2015.Two further applications remain under
consideration.
The Vendrennes PER substantially covers the 'Vendée Antimony
district', France's third largest antimony producing district which
during the 19th and beginning of the 20th century produced over
18,000t of Antimony metal substantially from the Rochetrejoux vein.
Most importantly, the PER includes Les Brouzils, a small high grade
open pittable antimony deposit that was discovered by the BRGM
(Bureau de recherches géologiques et minières - the French
Geological Survey) during the 1970's and 1980's.
According to BRGM literature (L'Inventaire minier de la France),
Les Brouzils hosts a 'geological resource' of 9,250t of antimony
metal at a grade of 6.7% Sb to a depth of 100m and is open along
strike and at depth.
NOTE: The above statement relating to a historic / foreign
'geological resource' and the figures quoted do not necessarily
conform to current internationally recognized resource
classification standards (e.g. JORC, PERC, CIM, SAMREC etc) and
cannot thus be classified as a resource (Inferred, Indicated or
Measured) under these codes and is stated for historical
information purposes only. No reliance should be placed on these
figures and it is uncertain that following evaluation and/or
further exploration work that the estimates stated above will be
able to be reported as mineral resources or ore reserves in
accordance with a recognised code. It will be the Company's
intention to work to verify or otherwise such numbers as soon as it
can access the appropriate data.
Production from a small open pit at Les Brouzils commenced in
1989 under a joint venture between Gagneraud and the BRGM and
produced some 895t of Sb metal in concentrate before closure in
1992 as a result of a significant decline in the antimony price
relating to the disposal of strategic metal stockpiles by the US
and USSR. Concentrates were produced through gravity and flotation
and quality was reported as excellent with no deleterious elements
present.
The Company intends to commence work on the Vendrennes PER
shortly.
Tenement details
United Kingdom -
The Company holds a lease (100%) from the Crown Estate
Commissioners over Cononish Farm, county of Perth, Scotland UK.
The Company holds a lease (100%) from the landowner over
Cononish Farm, county of Perth, Scotland UK.
The Company holds five Mines Royal Option Agreements (100%) with
the Crown Estate Commissioners as detailed below:
Glen Orchy: Location - counties of Perth and Argyll, Scotland
UK
Glen Lyon: Location - counties of Perth and Argyll, Scotland
UK
Inverliever: Location - counties of Dunbarton, Argyll and Perth,
Scotland UK
Knapdale: Location - county of Argyll, Scotland UK
Ochils: Location - county of Clackmannan, Perth, Kinross and
Stirling, Scotland UK
Portugal -
The Company holds a 100% interest in the Pomar Licence which is
valid for 3 years from May 2016 (with an option to extend) in
eastern central Portugal, near Castelo Branco though its subsidiary
Scotgold Resources Portugal Ltda.
France -
The Company holds a 100% interest in the Vendrennes PER (Permit
Exclusif de Recherche or Exploration Licence) through its
subsidiary SGZ France SAS.
No other beneficial interests are held in any farm-in or
farm-out agreements.
No other beneficial interests in farm-in or farm out agreements
were acquired or disposed of during the period.
Competent Persons 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 2012
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.
Note: No new exploration results are presented in this report.
All results have been previously notified under JORC 2004 and are
contained in Scotgold Annual reports 2008 - 2016 and various
corresponding market releases.
The information in this report that relates to the 2015 Mineral
Resources for Cononish Gold Project (refer ASX release - Resource
Estimate Update - 22/01/2015) is based on information compiled by
Malcolm Titley, a Competent Person who is a Member of The
Australasian Institute of Mining and Metallurgy. Mr Titley is
employed by CSA Global (UK) Limited, an independent consulting
company. Mr Titley 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 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves'. Mr Titley consents to the inclusion in
the report of the matters based on his information in the form and
context in which it appears.
The information in this report that relates to the 2015 Ore
Reserves for Cononish Gold Project (refer ASX announcement dated
26/05/2015) is based on information compiled by Pat Willis, a
Competent Person who is registered as a Professional Engineer
(Pr.Eng.) with the Engineering Council for South Africa (ECSA) and
a Fellow in good standing and Past President of the Southern Africa
Institute of Mining and Metallurgy (FSAIMM). Mr Willis is employed
by Bara Consulting Limited, an independent consulting company. Mr
Willis 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 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Mr Willis consents to the inclusion in the report of the
matters based on his information in the form and context in which
it appears.
Further, the Company confirms it is not aware of any new
information or data that materially affects the information
contained in the original announcements and that all material
assumptions and technical parameters underpinning the estimate of
Resources and Reserves continue to apply and have not materially
changed.
STRATEGIC REVIEW
The Company continues to review its corporate structure,
policies and practices with a view to maintaining and enhancing
shareholder value. In the current period under review, the
following initiatives have been implemented:
i) On 21 October 2016, the Company completed its de-listing from
the Australian Securities Exchange
ii) On 25 August 2017 the Company concluded its 1 for 100
consolidation of its shares. Together with the proposed sale of
small shareholdings, the consolidation of shares has resulted in a
more attractive and less cumbersome share structure which is
designed to enhance the Company's marketing and credibility for
funding of its development of the Cononish Gold and Silver
Project.
iii) Streamlining of its share register to remove, at the
holder's option, those shareholdings of less than a minimum value
of $500. This has had the result of removing over 200 small
shareholdings of a value of less than $500.00 each. This process is
ongoing at the date of this report.
iv) The Company's accounting function has been successfully
migrated to the UK and the operation of the BPT has allowed the
development of management systems that will stand us in good stead
for the coming construction and production at Cononish.
Operationally, the Company's immediate focus remains the
development of the advanced stage Cononish Gold and Silver Project
in Scotland. However, to provide longevity beyond Cononish, and
potentially growth in overall production, the Company is developing
a pipeline of projects that we anticipate will meet our criteria.
First and foremost of these is our Grampian Project which consists
of 5 Option Agreements ("Exploration Licences") in Scotland and
includes the highly prospective ground in the vicinity of
Cononish.
The Company has added diversity to its main focus through the
acquisition last year of the Pomar Licence in Portugal and this
year the Company was granted the Vendrennes License in France, with
2 further applications pending.
The fundamental technical work completed on Cononish last year,
with the revised Mineral Resource Estimate and Ore Reserve
Estimate, underpinned the Updated Bankable Feasibility Study (BFS)
completed in March 2017. Although this study amply demonstrated the
project's technical and financial viability, funding the new
reduced capital has remained a challenge. Taking advantage of the
"enforced" delay, the Company extended the Bulk Processing Trial
(BPT) for a further 12 months and is currently on going. This BPT
has met its primary objectives; having celebrated its official
launch the first gold produced was auctioned as "Scottish Gold
rounds" and subsequently Scottish gold sales at a substantial
premium of over 30% were concluded with the Scottish jewellery
industry. Most importantly the BPT demonstrated that an alternative
tailings facility design could offer significant advantages for the
Cononish project and the Updated BFS incorporated a "Dry Stack"
system. This revision further reduced the capital funding
requirement through a phased development
approach, as well as reducing environmental impacts and
facilitating progressive rehabilitation. The revision does however
necessitate a new planning application. The Company has gained
extensive experience through its previous successful applications
and given the improved aspects of the new design, is optimistic
that a positive determination will be made, currently expected in
December 2017.
The Updated BFS also demonstrated the increased value of
Cononish given the improved gold market, particularly in GB Pound
terms post the UK's Brexit decision. The price has ranged between
GBP1059/z and GBP904/oz since that decision and the assumed gold
price in the Updated BFS of $1150/oz and exchange rate of $1.25/GBP
(which implies UK gold price of GBP920/oz) is still considered
reasonable. Notwithstanding the improved gold price and reduced
capital requirement, the financing of projects in the sector
remains challenging. The Company is therefore exploring various
funding avenues, focusing on those appropriate for Cononish's
unusually small size, although it is recognized that any funding
plan is likely to be conditional upon a positive determination of
the planning application. In this connection, the revised financial
metrics included within the Updated Bankable Feasibility Study have
been well received by the Company's recently appointed investment
bank, Invenio Corporate Finance. Invenio have been engaged to
explore the debt and private equity markets in search for project
development funding.
The work completed on advancing our future pipeline of projects
has been modest due to the need to focus cash and management
resources on the advancement of Cononish. Work has generally
focused on analyzing the existing data and determining priorities,
such that cost effective exploration programs can be rapidly
implemented once constraints are relaxed.
From cost savings and strategic developments, to review of
project development opportunities, the Company is looking forward
to an exciting year ahead.
Operating Results
The consolidated loss after income tax for the financial year
was $1,348,167 (2016: $1,505,592).
Financial Position and Going Concern
At 30 June 2017 the Company had cash reserves of $572,332 (2016:
$738,866).
The audit report within the annual report refers to the
following note in relation to going concern:
'The financial statements have been prepared on the basis of
accounting principles applicable to a going concern, which assumes
the commercial realisation of the future potential of the
consolidated entity's assets and the discharge of their liabilities
in the normal course of business. At balance date, the Group had
current assets of $852,959 and current liabilities of $1,969,381.
In addition, the Group had a net cash outflow from operating
activities of $1,328,402 and investing activities of $763,143 and
available cash and cash equivalents of $572,332.
The consolidated entity is also anticipating revenues over the
ensuing twelve month period from gold sales derived from its Bulk
Processing Trial.
The Company has received a letter of financial comfort from its
major shareholder that amounts owing to him, but not due for
payment until 31 March 2018 of $1,742,964, will not be called for
repayment until such time as the Company is in a financial position
to do so.
While the Board considers that the consolidated entity is a
going concern it is also recognised that additional funding may be
required to ensure that the consolidated entity can continue to
fund its operations and further its mineral exploration and
evaluation activities during the twelve-month period from the date
of this financial report. Such additional funding, can potentially
be derived from either one or a combination of the following:
-- Loan funds
-- The placement of securities of up to $2.0m, as an excluded
offer pursuant to the Corporations Act 2001; or
-- The sale of assets.
Accordingly, the Directors believe the consolidated entity will
obtain sufficient funding to enable it and the consolidated entity
to continue as going concerns and that it is appropriate to adopt
that basis of accounting in the preparation of the financial
report.
However, the existence of the above conditions constitutes a
material uncertainty that may cast significant doubt in relation to
the consolidated entity's ability to continue as a going concern
and whether it will therefore realise its assets and extinguish its
liabilities in the normal course of business.'
Dividends
No dividends were paid during the year and no recommendation is
made as to dividends.
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 30 JUNE
2017
CONSOLIDATED
2017 2016
$ $
Revenue - interest received 211 1,459
Other income 41,417 -
Administration costs (389,511) (438,021)
Interest expense (64,966) (983)
Unwinding of convertible note
discount (55,974) (215,526)
Depreciation and gain on disposal
of property, plant and equipment (103,132) (15,376)
Exploration expensed as incurred (111,579) (131,303)
Employee and consultant costs (211,191) (278,702)
Listing and share registry costs (260,438) (229,571)
Legal fees (60,622) (84,417)
Office and communication costs (91,117) (71,549)
Other expenses (41,265) (41,603)
LOSS BEFORE INCOME TAX BENEFIT (1,348,167) (1,505,592)
Income tax benefit - -
LOSS FOR THE YEAR (1,348,167) (1,505,592)
Other Comprehensive Income
Items that may be reclassified
to Profit or Loss
Exchange difference on translation
of foreign subsidiaries (41,477) (94,490)
Total comprehensive result for
the year (1,389,644) (1,600,082)
============ ============
Basic (loss) per share (cents
per share) (0.09) (0.13)
STATEMENT OF FINANCIAL POSITION CONSOLIDATED
AS AT 30 JUNE 2017
2017 2016
$ $
CURRENT ASSETS
Cash and cash equivalents 572,332 738,866
Trade and other receivables 42,110 63,004
Inventory 222,248 26,993
Other current assets 16,269 21,109
Total Current Assets 852,959 849,972
------------- ---------------
NON-CURRENT ASSETS
Trade and other receivables 92,923 89,977
Plant and equipment 289,840 348,626
Mineral exploration and
evaluation 16,346,365 15,730,586
Total Non Current assets 16,729,128 16,169,189
TOTAL ASSETS 17,582,087 17,019,161
------------- ---------------
CURRENT LIABILITIES
Trade and other payables 180,522 157,835
Other current liabilities 45,895 121,439
Interest bearing liabilities 1,742,964 1,124,409
TOTAL LIABILITIES 1,969,381 1,403,683
NET ASSETS 15,612,706 15,615,478
============= ===============
EQUITY
Issued capital 27,216,549 25,829,677
Reserves 54,283 344,515
Accumulated losses (11,658,126) (10,558,714)
TOTAL EQUITY 15,612,706 15,615,478
============= ===============
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2017
CONSOLIDATED
Issued Accumulated Options Convertible Foreign Total
Capital Losses Reserve Note Currency Equity
Reserve Translation
Reserve
Year Ended 30 June 2016 $ $ $ $ $
Balance 1 July 2015 22,711,529 (10,077,922) 1,141,769 356,555 (34,519) 14,097,412
Placements (Note 13) 1,053,904 - - - - 1,053,904
Entitlements Issue (Note
13) 1,476,010 - - - - 1,476,010
Options exercised 254,388 - - - - 254,388
Share issue expenses (109,554) - - - - (109,554)
Equity portion of notes
issued 443,400 107,800 - (107,800) - 443,400
Options expiry - 917,000 (917,000) - -
Total comprehensive
result for the year - (1,505,592) - - (94,490) (1,600,082)
----------- ------------- ---------- ------------ ------------- ------------
As at 30 June 2016 25,829,677 (10,558,714) 224,769 248,755 (129,009) 15,615,478
=========== ============= ========== ============ ============= ============
Year Ended 30 June $ $ $ $ $
2017
Balance 1 July 2016 25,829,677 (10,558,714) 224,769 248,755 (129,009) 15,615,478
Placements (Note 13) 880,000 - - - - 880,000
Options exercised 4,133 - - - - 4,133
Share issue expenses (53,861) - - - - (53,861)
Equity portion of notes
converted 556,600 248,755 - (248,755) - 556,600
Total comprehensive
result for the year - (1,348,167) - - (41,477) (1,389,644)
----------- ------------- -------- ---------- ---------- ------------
27,216,549 (11,658,126) 224,769 - (170,486) 15,612,706
=========== ============= ======== ========== ========== ============
STATEMENT OF CASH FLOWS CONSOLIDATED
FOR THE YEARED 30 JUNE
2016
2017 2016
$ $
CASH FLOWS FROM OPERATING
ACTIVITIES
Payment to suppliers (1,328,402) (1,343,403)
Interest income received - 326
Net Cash Outflow From Operating
Activities (1,328,402) (1,343,077)
------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Payments for exploration
expenditure (717,927) (1,050,176)
Purchase of property, plant
and equipment (45,216) (259,398)
------------ ------------
Net Cash Outflow From Investing
Activities (763,143) (1,309,574)
------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of shares
and options 884,133 2,784,301
Share and option issue transaction
costs (53,861) (109,553)
Borrowings costs and interest (38,658) -
Proceeds from borrowings 1,166,667 -
------------ ------------
Net Cash Inflow From Financing
Activities 1,958,281 2,674,748
------------ ------------
Net increase/(decrease) in
cash held (133,264) 22,097
Effect of exchange rate fluctuations
on cash and cash equivalents (33,270) (85,880)
Cash and cash equivalents
at the beginning of this
financial year 738,866 802,649
Cash and cash equivalents
at the end of this financial
year 572,332 738,866
============ ============
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2017
2017 2016
$ $
NOTE 1 - REVENUE
Revenue
Interest received 211 1,459
Other income (currency variance) 41,417 -
------- ------
Total revenue 41,628 1,459
======= ======
NOTE 2 - LOSS FROM ORDINARY ACTIVITIES BEFORE TAX EXPENSES
Expenses
Interest expensed 64,966 983
-------- -------
Total borrowing cost expensed 64,966 983
======== =======
Depreciation of non-current assets
Plant and Equipment 100,892 11,749
Motor vehicles 2,220 3,598
Office furniture and equipment 20 29
-------- -------
Total depreciation of non-current
assets 103,132 15,376
======== =======
NOTE 3 - INCOME TAX
The prima facie tax benefit at 27.5% (2016: 28.5%) on loss from
ordinary activities is reconciled to the income tax benefit in the
financial statements as follows:
Loss from ordinary activities (1,348,167) (1,505,592)
Prima facie income tax benefit at
27.5% (2016 28.5%) 370,746 429,094
Tax effect of permanent differences
Option based payments - -
Share issue costs amortised 25,407 26,000
Other non-deductible expenses - (634)
Income tax benefit adjusted for permanent
differences 396,153 454,460
Deferred tax asset not brought to
account (396,153) (454,460)
Income tax benefit - -
============ ==============
2017 2016
$ $
INCOME TAX BENEFIT
The directors estimate the cumulative unrecognised deferred tax
asset attributable to the company and its controlled entity at
27.5% is as follows:
UNRECOGNISED DEFERRED TAX ASSETS
Revenue losses after permanent differences 2,747,235 2,351,082
Capital raising costs yet to be claimed 55,083 61,822
---------- ----------
2,731,455 2,412,904
========== ==========
The potential deferred tax asset has not been brought to account
in the financial report at 30 June 2017 as the Directors do not
believe it is appropriate to regard the realisation of the asset as
probable. This asset will only be obtained if:
(a) The company and its controlled entity derive future
assessable income of an amount and type sufficient to enable the
benefit from the deductions for the tax losses and the un-recouped
exploration expenditure to be realised;
(b) The company and its controlled entity continue to comply
with the conditions for deductibility imposed by tax legislation;
and
(c) No changes in tax legislation adversely affect the company
and its controlled entity in realising the benefit from the
deductions for the tax losses and un-recouped exploration
expenditure.
Franking Credits
No franking credits are available at balance date for the
subsequent financial year.
NOTE 4 - CASH AND CASH EQUIVALENTS
Cash at bank and on hand 572,332 738,866
======== ========
NOTE 5 - TRADE AND OTHER RECEIVABLES
Current
GST / VAT receivable 38,900 61,825
Other receivables 3,210 1,179
------- -------
42,110 63,004
======= =======
Non-current
Bond on Tenement 92,923 89,997
======= =======
NOTE 6 - INVENTORY
Inventory of gold concentrates 222,248 26,993
======== =======
NOTE 7 - OTHER CURRENT ASSETS
2017 2016
$ $
Prepayments 16,269 21,109
======= =======
NOTE 8 - PLANT AND EQUIPMENT
Plant and equipment
Cost 655,293 610,947
Accumulated Depreciation (365,453) (262,321)
---------- ----------
289,840 348,626
========== ==========
Movement for the year
Opening balance 348,626 104,605
Additions 44,346 259,397
Depreciation expensed (103,132) (15,376)
---------- ---------
Closing balance 289,840 348,626
========== =========
NOTE 9 - MINERAL EXPLORATION AND EVALUATION
Opening balance 15,730,586 14,794,913
Net (gain)/loss from the BPT (32,357) 90,801
Additional expenditure deferred during
the year 759,715 976,175
Expenditure as incurred (111,579) (131,303)
----------- -----------
Closing balance 16,346,365 15,730,586
=========== ===========
The ultimate recoupment of exploration expenditure carried
forward is dependent upon successful development and commercial
exploitation, or sale of the respective areas.
The net gain (2016 - loss) from the BPT is an integral part of
the Company's Mineral Exploration and Evaluation, and includes
$78,841 of revenue from Dore sales (2016: $nil) , $308,015 of
revenue from Concentrate sales (2016: $nil) and $354,499 of
production costs (2016: $90,801). The criteria to reclassify
Mineral Exploration and Evaluation expenditure to Development have
not yet been met and continue to be accumulated.
NOTE 10 - TRADE AND OTHER PAYABLES
Trade creditors 180,522 157,835
Other accruals 45,895 121,439
-------- --------
226,417 279,274
======== ========
Trade creditors and accruals relating
to exploration expenditure 96,822 115,142
Trade creditors and accruals relating
to administration 129,595 164,132
-------- --------
226,417 279,274
======== ========
Trade creditors are non-interest bearing and are normally
settled on 30 day terms (2016: 30 days).
NOTE 11 - INTEREST BEARING LIABILITIES
Convertible Notes
The Company entered into Convertible Note Agreements
(Convertible Notes) on the terms and conditions set out in the
Company's Notice of Meeting dated 23 June 2014 (and approved by
Shareholders at the General Meeting on 30 July 2014). The
Convertible Notes were fully settled in the year ended to 30 June
2017.
Last financial year, on 22 March 2016, $443,400 Convertible
Notes were converted into 73,900,000 ordinary shares of the Company
at the conversion price of $0.006 per share. This partial
conversion reduced the principal amount due under the Convertible
Notes by the same amount.
During the year on 2 September 2016, $220,000 Convertible Notes
were converted into 36,666,667 ordinary shares of the Company at
the conversion price of $0.006 per share.
On 23rd September 2016 a further $336,600 Convertible Notes were
converted into 56,100,000 ordinary shares of the Company at the
conversion price of $0.006 per share.
The remaining Convertible Note of GBP300,000 ($600,000) was
repaid on the repayment date of 30 September 2016 by a loan from a
shareholder of GBP300,000 ($508,200), refer below.
The balance outstanding at 30 June 2017 is made up as
follows:
First draw Second Total
draw
23 September, 30 March,
2014 2015
$ $ $
Balance at 30 June 2016 537,764 586,645 1,124,409
-------------- ---------- ----------
Unwinding of discount 17,336 13,355 30,691
Conversion to shares (556,600) - (556,600)
Foreign exchange 1,500 (91,800) (90,300)
Conversion to loan (GBP300,000) - (508,200) (508,200)
-------------- ---------- ----------
Balance at 30 June 2017 - - -
============== ========== ==========
Shareholder loans
On 30 September 2016 The Company entered into an interest
bearing loan agreement with Nat le Roux, the Company's non
executive Chairman and major shareholder, for an amount of
GBP300,000 ($508,200), The funds were used to repay the Convertible
Note of GBP300,000 ($508,200) which expired on 30 September
2016.
The loan was unsecured, interest was charged at 6% per annum and
the loan could not be called before 30 September 2018. The loan
could be repaid with accrued interest at any time at the election
of the Company. The loan and interest were fully repaid on 14 March
2017.
On 14 March 2017 the Company entered into a second short term
loan agreement for GBP1,000,000 with Nat le Roux. The term of the
loan is one year ending on 14 March 2018 with an interest rate of
10% per annum. The principal is repayable at the expiry of the term
with interest. The loan is secured by a charge over all the
Company's assets.
The GBP1,000,000 funds have been used to fully repay the
existing GBP300,000 loan facility plus accrued interest (6% pa)
provided by Nat Le Roux.
The loan balance outstanding at 30 June 2017 is made up as
follows:
First loan Second
loan
30 September 14 March
2016 2017
$ $
Principal sum drawn 508,216 -
(GBP300,000)
Principal sum drawn
(GBP1,000,000) - 1,666,667
Interest accrued 14,875 50,091
Repayment (523,091) -
Foreign exchange - 26,206
- 1,742,964
============= ==========
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKFDKDBKBBCB
(END) Dow Jones Newswires
September 29, 2017 02:00 ET (06:00 GMT)
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