🕐02.06.10 - 10:54 Uhr
SCOTGOLDS CONONISH GOLD AND SILVER PROJECT PROGRESS UPDATE
ASX Announcement: Scotgold Resources (ASX: SGZ)
2 June 2010
CONONISH GOLD AND SILVER PROJECT PROGRESS UPDATE
As part of the on-going development of the Cononish Gold and Silver Project
towards production, the Company is pleased to announce the following
progress.
Highlights
- AMC commissioned to update Scoping Study
o Study to be completed in August
o Project development options to be finalized during third quarter
- Revised date for Planning Permission Decision
o Recent transposition of EU legislation requires public advertisement
o New decision date anticipated mid to late August.
- Definitive plant costing study commenced by Gekko
o Final testwork commenced on optimized flowsheet to confirm predicted
recoveries
- Feasibility level tailings design completed by AMEC
Chris Sangster, Scotgold CEO, comments: We are pleased to enter this final
phase of project development in respect of the Cononish Gold and Silver
project.
Completion of the updated study will be a significant milestone
towards becoming a gold producer and will enable the Company to progress to
a development decision in the third quarter of 2010.
There has been a significant sustained increase in the gold price since the
2009 scoping study was completed (at a Base Case price of GBP450 / oz).
At
current prices in excess of GBP800 / oz, based on the 2009 study, we
believe the Cononish Project would deliver robust returns with payback
achieved in 12 months and free cashflows in excess of GBP60M over the
currently anticipated project life of 7 years.
The revised decision date for the planning permission is not expected to
significantly impact on potential development timescales for the project
and the Company remains on track (subject to permitting and financing) for
first gold production in late 2011.
CONONISH PROJECT UPDATE
Mining and Scoping Study Review
Scotgold has recently commissioned Australian Mining Consultants (AMC) to
update critical components of the Cononish Scoping study.
The study is expected to be available in August and will enable the Company
to finalise development options for the project leading to a production
decision.
Subject to certain project milestones including planning
permission and financing for the project, Scotgold anticipates first gold
production in late 2011.
AMC will review and update the mining development and production schedule
and capital and operating costs (with a target +/-15% accuracy) based on
recent additions to the resource at Cononish (see ASX Release 5th February
2010 -- Cononish Drilling and JORC Update).
The study will also be updated with work completed since the 2009 study in
the areas of processing (Gekko Systems Pty Ltd ("Gekko") definitive costing
study), tailings disposal (AMEC feasibility level tailings design) to
similar levels of accuracy and review the financial model including gold
price forecasts.
A summary from the 2009 AMC scoping study can be found on the companys
website
- Cononish Scoping Study confirms economic viability -- 17th February
2009).
The study estimated annualised production of 21,000 ozs of gold and
80,000 ozs of silver for a six and a half year production life.
Returns
using the then spot price of gold (GBP662 / oz) gave an NPV of GBP25.6M and
an IRR of 74%.
Operating costs were estimated to be GBP229 /oz.
Revised Date for Planning Permission Decision
Scotgold lodged its application for planning permission on 25th January
2010.
The
application was subsequently validated and the Company signed a non-legally
binding
processing agreement with the Planning Authority which indicated a decision
date of 7th June 2010.
In response to EU Directive 2006/21/EC regarding the management of waste
from extractive industries (and subsequent to Scotgolds application), the
Scottish Government adopted the Management of Extractive Waste (Scotland)
Regulations 2010 and issued draft guidance documents on the application of
these regulations.
The guidelines require the submission of a Waste
Management Plan and for it to be notified publicly by the Planning
Authority.
In addition, responses to the application have been received from statutory
consultees, Scottish Natural Heritage and Scottish Environmental Protection
Agency, who indicated holding objections pending provision of further
information and clarification on a number of issues.
The Planning Authority
has also requested clarification and further information regarding certain
aspects of the application, notably in relation to the socio-economic
impacts of the development.
A number of meetings have been held with the relevant bodies in order to
provide such
information and clarification.
The Company will submit further
documentation relating to all requests for further information and
clarification to the Planning Authority on 7th June.
Under the Town and Country Planning Act (Scotland) 1997 and the
Environmental Impact Assessment (Scotland) Regulations 1999, it is deemed
that this further documentation, in addition to the Waste Management Plan,
is required to be re-advertised for a period of 28 days.
As such, to
accommodate the period for re-advertisement, a revised processing agreement
will be signed shortly with the Planning Authority with an expected
decision date of mid to late August.
Definitive Costing Study for Processing Plant
Following a detailed metallurgical testwork programme conducted at AMMTEC
Laboratories in Perth (Australia), Scotgold has recently commissioned Gekko
to complete a Definitive Costing Study (+/- 10% accuracy) for the Cononish
project processing plant.
The study is due to be completed by the middle of
July
Scotgold has recently completed a further phase of metallurgical testwork
to optimize and finalise the plant flowsheet.
The testwork examined various
combinations of flotation and gravity / flotation circuits to maximise gold
recovery to free gold (recovered on site) and overall recovery.
All testwork indicated a high amenability to the proposed flowsheet
arrangements with
recoveries from all testwork in excess of 90% for gold.
Discussions with Gekko and Scotgolds metallurgical consultant have now
finalised the flowsheet and Gekko will proceed to complete the study on the
agreed flowsheet.
The flowsheet encompasses two stage crushing, milling followed by a gravity
recovery
section and subsequent flotation.
Concentrates from both the gravity and
flotation process will be combined and reground to maximize recovery of
free gold and to reduce the mass of concentrate required to be
transported for further processing.
A final sample will shortly be processed to confirm recoveries to be used
in the AMC study.
AMEC study
As part of the planning application, AMEC Earth and Environmental (AMEC)
has completed a feasibility level design for the Tailings Management
Facility for the Cononish project.
The design provides for a facility to
retain 1Mt of tailings to cater for possible future extensions to resources
at Cononish and is designed in accordance with all applicable EU and UK
legislation.
To view the full ASX announcement please click here.
http://esp.gewru.com/download/files/12414/1180256/Connonish%20Gold%20and%20Silver%20Project%20Progress%20update.pdf
For further information please contact:
Shane Sadlier
Non-Executive Director
Scotgold Resources Limited
Lindsay Street, Perth WA
Tel: +61 (8) 9428 2950
Mobile: +61 (0) 411 704 498
E:
Karen Oswald
Professional Public Relations
Tel: 08 9388 0944 / 0423 602 353
E:
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