Scotgold Resources announced that it will soon begin processing a portion of a stockpile of approximately 7,000 tonnes of ore at the site near Loch Lomond inside the borders of the Trossachs National Park to pave the way for full-scale mining. The company called it a significant milestone on the path to full production at the gold mine.
The company said the deposit could contain as much as 200,000 ounces of gold.
Richard Gray, Scotgold chief executive officer said he hoped an initial six-month attempt to process 7,000 tonnes of ore excavated since the mine was first tunneled in the 1990s would pave the way for a bigger mine, The Financial Times reported.
Scotgold is targeting production of around 20,000oz of gold and 80,000 oz of silver annually for eight years with total production of 175,000 oz gold and 639,000 oz silver. Capital outlays for the Cononish project including life of mine capital development is a modest US$34 million and according to Scotgold average life of mine operating costs a mere $523 per ounce.
The company will have to pay a royalty to the Crown Estates for the precious metals, including small quantities of silver, that it produces. But Gray said “100 per cent Scottish gold” could command a “significant premium,” capitalizing on the market for jewelery and souvenirs among visitors to the Highlands.
The trial operation will create only a handful of jobs but Scotgold says about 60 could be created when the mine is fully operational.
The small company, which is listed on Aim and on the Australian stock market, is trying to revive the project after an increase in interest in mining in the UK, countering the long decline of the coal industry.
A tungsten mine opened in Devon last year while other companies are exploring gold in Ulster and potash deposits in North Yorkshire. This month a Canadian company put forward plans to buy Cornwall’s South Crofty tin mines, shuttered for more than 15 years.
Higher demand for the precious metal is also boosting gold miners’ share prices.
Signs of a revival in the gold price are also likely to help Scotgold, after the company’s attempts to win financing in 2013 were scrapped by a steep decline in the value of the precious metal.
The gold-bearing rocks in central Scotland are part of the same geological belt that Dalradian Resources is now exploring in Northern Ireland. Attempts to mine gold at Cononish, which is about 90km north-west of Glasgow, started in the 1990s and produced a tunnel of about 1km into the hills near Tyndrum.