JOHANNESBURG (miningweekly.com) – Following the completion of a bankable feasibility study (BFS) for the Cononish gold and silver project, in Scotland, in 2015, Aim-listed Scotgold Resources has elected to adopt a phased project development option.

The development of the mine is now based on a two-phase project approach wherein the second-phase build-up in the third quarter of 2021 to 6 000 t/m is funded from the first phase of 3 000 t/m, which is expected to reach sustainable levels by 2019.

“While the company has a demonstrably viable project in the Cononish gold mine, we have struggled since the completion of the BFS in August 2015 to secure a funding package on terms acceptable to shareholders,” explained nonexecutive chairperson Nat le Roux.

Le Roux, who also provided the company a £1-million short-term loan, continued: “The revised development plan [that has now been] completed significantly lowers the financing hurdle and improves the economic returns, with significant further enhancement from the current pound Sterling price of gold.

“It does, however, mean that the company requires further working capital to complete the permitting process and I have, therefore, agreed to offer a loan facility to the company as a mechanism to bridge this gap.”

Scotgold is currently revising the permitting requirements, with final permissions expected to be granted by the first quarter of 2018 and the underground development work to kick off in the second quarter of 2018.

The phased approach allows improved economic returns owing to both the change in the tailings storage facility (TSF), which is now designed to use a dry stack system, and a higher assumed gold price of $1 150/oz.

The peak funding requirement reduced from £18.5-million to £7.4-million, while the life-of-mine earnings before interest, taxes, depreciation and amortisation increased from £67-million to £100-million, the pretax internal rate of return to 10% and the net present value of £23-million to £43-million.

While the total capital cost of the processing plant increased from £7.2-million to £8.04-million in the phased approach, owing to the need to install an interim reduced capacity plant for Phase 1, Scotgold believed that there would be further cost savings possible in the final plant.

Total all-in cash costs of £487/oz is expected for the phased approach, compared with £455/oz in the original BFS.