Shares in troubled miner Scotgold Resources (LON: SQZ) fell more than 70% on Monday after it warned there was “significant” uncertainty over its ability to keep operations going at Scotland’s first commercial gold and silver mine.
The company behind the Cononish, which received initial approval for the mine in 2018, poured first gold in December 2020 and achieved commercial production in July last year.
Despite efforts to optimize production, the Scottish miner has had to revise output targets downward.
It now said that in February and into early March this year, the 430 West ore drive turned to waste, negatively affecting production and gold grades, which had not been as high as anticipated.
The firm noted it was moving to a method of mining called long hole stoping, which is more cost-effective than the current utilized technique.
Any delays in switching to the new process, the miner warned, will inevitably put a strain on its finances.
Scotgold is currently in discussions with its offtake partner to secure an advance of $500,000 to ensure it doesn't experience a shortfall in working capital,
The company’s directors may also be called upon to provide a short-term convertible loan should the need arise, it said.
The firm, which is due to release its half-year results later this week, also revealed that the email accounts of its executive directors had been accessed by “unauthorized persons” and emails sent in their names to numerous people. It believes that the issue has been resolved but the police have also been informed.
Shares in Scotgold were trading almost 71% lower on Monday early afternoon to 11.10 pence each, leaving it with a market capitalization of £7.9 million.
The company behind Cononish, Scotland’s first commercial gold and silver mine, said it may not be able to meet future financial obligations.