Quarterly Report

RNS Number : 0232Q

Scotgold Resources Ltd

01 November 2012

 



Scotgold Resources Limited ("Scotgold" or the "Company")

SEPTEMBER 2012 QUARTERLY REPORT

 

HIGHLIGHTS

Cononish Gold and Silver Project

·    Infill drilling completed and results received over western section

·    Drilling on-going to further infill portions of Inferred Resource in eastern section

·    Update to resource estimate commenced

·    Pre development funding with RMB Australia Holdings Ltd concluded

Cononish Gold and Silver Project

Infill Drilling Program Results

Scotgold re-commenced infill drilling at Cononish in January 2012. The drilling program was aimed at converting inferred resources to indicated resources 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.

Results

A total of fourteen holes were drilled (including one in 2010) into the western portion of the Inferred Resource. Final results from the whole program are shown in Table 1 and Figure 1 below.

Table 1 - Infill drilling results (2010 - 2012) - West Raise Area

Hole Number	From (m)	To (m)	D/H Width (m)	Est. true thick (m)	Au g/t	Ag g/t
CF 12 - 01	112.46	114.77	2.31	2.0	13.95	47.6
CF 12 - 02	105.05	107.67	2.62	2.4	14.21	39.7
CF 12 - 03	125.00	130.42	5.42	3.3	27.21	44.1
Con 10 - 05	79.15	83.00	3.85	2.1	14.82	55.5
CF 12 - 04	107.00	112.60	5.60	3.8	14.90	40.8
CF 12 - 05	109.42	113.16	3.74	3.3	1.30	11.6
CF 12 - 06	112.35	115.66	3.31	2.6	27.43	68.6
CF 12 - 07	104.87	106.92	2.05	1.9	5.24	37.2
CF 12 - 08	110.21	112.60	2.39	2.2	2.05	15.7
CF 12 - 09	64.05	69.02	4.97	2.4	22.47	45.9
CF 12 - 10	66.98	69.88	2.90	1.3	9.84	35.7
CF 12 - 11	74.67	76.86	2.19		1.40	3.9
CF 12 - 12	83.89	86.37	3.27		2.42	13.4
CF 12 - 13	Abandoned

Drill statistics are shown in Appendix A

The results from this program will shortly be incorporated in an updated Resource Statement to be completed by Snowdens Mining Industry Consultants Ltd (Snowden).

The updated Resource Statement will form the basis for the definitive mining plan and the Cononish Project Development Study to be completed under the auspices of Australian Mining Consultants UK Ltd (AMC). The Company will then be in a position to determine the optimum debt capacity of the project.

It is anticipated that this work will be complete in early 2013 and subject to concluding financing arrangements, the Company envisages a project go-ahead decision in April 2013 with a start of construction in June 2013 with first gold production early in 2014.

Figure 1

An illustration showing the location of the drill holes can be found on Scotgold's website at www.scotgoldresources.com under ASX announcements.

Drilling has also commenced in the Eastern Section of the Inferred Resource with 5 holes planned and an initial hole completed.

Financing

The Company concluded a pre development funding agreement with RMB Resources ("RMB") for a £1.18m financing (the "Facility").

The Facility is a convertible loan structured as a secured corporate loan facility with share options which provide 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 approved the Facility subject to the satisfactory completion of legal due diligence which was concluded on 27 July 2012.

In addition to the Facility agreement, Scotgold has agreed to mandate RMB to arrange a gold pre payment facility to part 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.

EXPLORATION UPDATE - GRAMPIAN GOLD PROJECT

The Company continues to actively pursue exploration activities on its substantial land position of some 4,200km2 in the south west Grampians of Scotland.

Regional fieldwork including ongoing stream sediment sampling continued over the Inverliever, Cononish / Glen Orchy and Glen Lyon option areas.

Initial field visits were conducted to the Knapdale and Ochil option areas.

AQ drilling was carried on a vein structure to the south of the Cononish vein and results are awaited.

For further information please contact:

United Kingdom:

Scotgold Resources Limited	Westhouse Securities Limited	Bankside Consultants
John Bentley (Chairman) Chris Sangster (CEO)	Richard Baty / Petre Norton	Simon Rothschild / Harry Gourlay
Tel: [phone]	Tel: [phone]	Tel [phone]

Australia:

Scotgold Resources Limited	Professional Public Relations
Shane Sadleir (Non-Executive Director)	Belinda Newman
Tel:       [phone] Mobile: [phone]	Tel:       [phone] Mobile: [phone]

Competent Person's 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 2004 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.

Forward Looking Statements:

This release includes certain "forward looking statements." All statements, other than statements of historical fact, are forward looking statements that involve various risks and uncertainties.

There can be no assurances that such statements will prove accurate and actual results and future events could differ materially from those anticipated in such statements.

Appendix 1 Drill statistics

Hole No.     Easting     Northing     Altitude        Dip           Azimuth     EOH          Core CF 12-01        228690      728043          538            -50               317         126.6           NQ CF 12-02        228690      728043          538            -41               319         121.9           NQ CF 12-03        228690      728043          538            -55               314         139.4           NQ CF 12-04        228690      728043          538            -45               305         122.9           NQ CF 12-05        228690      728043          538            -35               297         123.1           NQ CF 12-06        228690      728043          538            -45               294         135.7           NQ CF 12-07        228690      728043          538            -45               330         129.2           NQ CF 12-08        228690      728043          538            -30               295         124.2           NQ CF 12-09        228569      728008          542            -50               348          77.6            NQ CF 12-10        228569      728008          542            -63               330          85.2            NQ CF 12-11        228569      728008          542            -63               275          95.5            NQ CF 12-12        228569      728008          542            -67               260         104.1           NQ CF 12-13        228569      728008          542            -72               250         168.3           NQ CON 10-05     228641      728089          565            -77               327          91.7            NQ

Background

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 3 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 4,200 km² covering the highly prospective Dalradian terrain across the south west Grampians.

Table 3:

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.

 

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