Scotgold Resources Share Discussion Threads

[pr100] 05/5/2021 07:42

So the previously announced short term interest-free director loan of £2m came through to keep the lights on for another month or two. It couldn't be secured on assets as those are already pledged as security to the chairman. And the absence of interest is an act of mercy since Scotgold are already buckling under the interest liabilities on their existing £15m of borrowings.

The big question is how far £2m will take them. Most historical fundraisings have been gobbled up by their mounting liabilities - and going by the interim results signed off on 30 April, Scotgold were already effectively trading while insolvent at the end of 2020. At that point they had cash and cash equivalents of £2.6m and current liabilities of £3.3m.

A further £500k drawdown on the NLR facility on 5 Feb, quickly followed by the final £500k tranche on 17 March wouldn't have touched the sides given the rate at which this project is burning cash. So an emergency £1.7m placing on 7 April was needed - now followed by a further £2m loan, taking total borrowings to a mahoosive £17.5m.

The true state of the company's finances is evidenced by the fact that the chairman had to lend the company a trifling £22,800 to pay a bill for recruitment fees.

We have already been warned that production and revenues will be lower than forecast in 2021 so the date when the mine finally generates cash keeps slipping back - meaning that more cash will need to be pumped in within a couple of months.

Given that the mine needs an operating profit of around £1m per month to break even at the moment, much will depend on the numbers which they have so far been hiding from the market.

Imho, this mine will keep gobbling cash throughout 2021 and possibly well into 2022. So be prepared for some hefty dilution before very long. And it may not be the last.

No porky pies or omelettes here so this note is dedicated to habitual liar Risk.Manager in the other place.

[pr100] 28/4/2021 12:10

"they are learning that to develop faces and mine them are rarely possible together"

@Resourceful: Doesn't this happen with every new underground gold mine?

[resourceful] 28/4/2021 11:52

they are in serious trouble they are learning that to develop faces and mine them are rarely possible together
this wont be fixed easily

[pr100] 28/4/2021 09:50

It's been a scam from day 1, once they discovered that no bank or institutional investor would fund the project. Ever since then there has been a constant stream of financing events with almost every one declaring that the project would now be fully funded through to cash generation.

And the worst scam of all was the October £3m placing at 110p at a time when Scotgold must have known that the promises they made to investors could not be delivered. Surely one or several of those placees will be asking the regulators to investigate for possible fraud.

The "gold pour" and the nonsense RNSs around it were obviously a set-up job designed solely to reassure those placees. Those RNSs contained lies. The "gold pour" itself was a lie.

Sometime soon they are going to have to fess up to actual throughput the plant can deliver as well as the actual grade of the stuff they are feeding to it. I fear that will spark another almighty share price drop.

Then they will have to confess how long it will really take them to start generating cash because it's now looking as though that could be a year or more away - meaning they probably need another £10m in financing to see them through - not that the old Scotgold would come clean on that.

[p5tvr] 28/4/2021 09:37

steelwatch is this another one of your great investments? LOL

[letmepass] 28/4/2021 09:11

Glad I got out at 90p. Appears that everyone is leaving

[pr100] 27/4/2021 13:42

The demented and deluded Risk.Manager will tell any lie he can think of to avoid admitting that Shylock was right about this company and its hapless CEO. For sure, no-one actually believes his nonsense about Shylock working with David Cameron to wipe PIs out but that doesn't seem to bother him. He's clearly in a bad way.

Meanwhile, today's production update reports that the new plant is working but says nothing about throughput or gold grades - indicating that it isn't producing, presumably because it hasn't been signed off as safe. It seems they are going to have to settle for a reduced ore throughput.

Gold grades were always going to be 20% lower in year 1 but it seems that they will be even lower than that, if and when they are allowed to produce any.

The mine metrics are due to be downgraded yet again and a lot more dilution is imminent. They will also presumably have to extend the life of the mine, if they can get planning permission to do so.

A new Proactive interview with Gray's successor, Phil Day, suggests he is floundering too.

[steelwatch] 08/4/2021 17:16

Gold price at the moment £1,278.37/troy oz

[steelwatch] 07/4/2021 23:39

Scotgold Resources* (LON:SGZ) 72p, Mkt Cap £40m – Earnings update

BUY – 147p (from 177p)

The Company raised new equity last week and updated on the status of the Cononish ramp up process.

£1.5m was raised in a placing of 2.1m shares at 70p.

Additionally, Bridge Barn owned by major shareholder and the Chairman of the Company Nathaniel le Roux agreed to provide further debt funding of £0.5m if it is needed in the future.

The Company reiterated its CY21 production guidance for 25.7-28.5kt throughput and 7.0-7.9koz gold.

Proceeds will cover working capital requirements as operations at the recently commissioned high grade Cononish mine ramp up.

Longer than expected ramp up at the processing plant see commissioning of Phase 2 expansion to 72ktpa being delayed to Sep/22, from previous target May/22.

Processing plant issues highlighted earlier are being addressed including at the filter press part of the circuit that held back ramp through March.

The Company also released updated Cononish earnings and NPV projections adjusting for new ramp up schedule and lower gold price assumptions reflecting a pull back in market prices.

Using £1,250/oz gold price, the mine is expected to generate >£20m in EBITDA and >£15m in FCF (post-tax) per year following Phase 2 ramp up to 72ktpa, ~24kozpa GE and ~£430/oz (~$600/oz) AISC.

Conclusion: The fundraise along with access to expanded loan facility covers working capital requirements as the team ramps up production at the recently commissioned high grade Cononish operation.

Our updated earnings estimates largely reflect lower long term gold price estimates ($1,800/oz v $1,925/oz previously) and adjusted FX assumptions (1.4 v 1.3 before).

We expect the plant to ramp up to design 36ktpa (3ktpm) processing rates through the current quarter with CY21 production expected at 26kt and 7.7koz, in line with latest Company guidance.

On spot prices (~$1,740/oz, 1.4 FX), we estimate Scotgold to generate ~£20m EBITDA and £15m FCF (post-tax) at Phase 2 implying 2.4x EV/EBITDA multiple and 39% FCF yield. We would argue that given high grade nature of the deposit, favourable jurisdiction and significantly de-risked status of the project (permitted, in production and ramping up), a target multiple of 4.0x is applicable translating into 128p NAVPS at spot gold prices. We value Scotgold on DCF5% basis at $1,800/oz/1.4 GBPUSD with no premium included in our estimates for the dore part of the Cononish production or ~25% of annual output (although the management has highlighted strong demand from local jewellers willing to pay a premium for locally sourced gold of up to £400/oz on anecdotal evidence) to arrive at updated 147p NAVPS reiterating our BUY recommendation.

[steelwatch] 01/4/2021 14:53

Sterling gold testing £1250/oz

[steelwatch] 01/4/2021 12:26

Gold seems to have hit a double bottom. Only one indicator as to here it goes from here of course.


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[pr100] 01/4/2021 09:49

No 7am RNS from the new boss, as some would have been hoping for.

Do we know that he is actually there? His first job, surely, from a personal and regulatory perspective should have been to update the website to include himself! And yet we're approaching lunchtime and the hapless Gray is still listed as the CEO.

Meanwhile, the paranoid nutter who writes the most but contributes the least of all the cult followers in the other place believes that I published extracts here from yesterday's RNS before the RNS was syndicated. I suggest he wastes even more of his pointless life by reporting me to the authorities. (Not that anyone apart from me reads his demented diatribes, surely.)

But is the cult still intact? Many of the LTHs seem to have finally lost faith. And the cult leader has done a runner.

Anyway, unless I feel the urge to comment on major news from Scotgold, this is farewell from me. The hapless Gray who incurred my disdain, suspicion and wrath over his years of false promises, missed targets, inept forecasts and cash-raising ambushes, has finally been sacked and I hope the new guy can rescue the mine from the mess that Gray left it in.

I hope I have helped some and annoyed others.

[steelwatch] 31/3/2021 17:23

Just for the record pr:


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[cinoib] 31/3/2021 07:45

More cash required I see and a nice drop in sp, but still grossly over valued, considering others are in production, paying a divi and still priced well below this one. Will sit on the sidelines a bit longer as am sure my target price will come. Before you ask 20p. According to the guru's first we will see 1,600 before rocketing to $3,000 So time yet.

[pr100] 30/3/2021 13:03

Gold price falling and the outlook is bleak for months, say the analysts. Now at £1,225/oz, it's already a long way below the £1,400 level on which the Cononish life-of-mine revenue forecasts are based. Presumably Scotgold will re-work those numbers shortly.

Not that it's having an immediate impact since the mine isn't producing any/much gold, as far was we know.

Some might say that at least the hapless Gray is off the hook on this one but others will think it was rash to cash in on the £1,400 metric to boost the value of the project (on paper) just because it was briefly credible.

[pr100] 29/3/2021 12:19

It's not looking great for hitting the latest and much reduced Cononish target of 1,000t of ore by the end of this month... When TyndrumBoy1872/henrik1967/vfb1888/wee Graham/etc only posts once in the past fortnight, he's got to be keeping his head below the parapet because his news ain't good. Well soon find out.

[steelwatch] 23/3/2021 01:45

Gold bullish longterm. Miners to lead the way. See video:



New chart above to watch - SGZ v Gold Miners Index STOXX:4UGJ

[steelwatch] 15/3/2021 17:40

Well, tempting providence, I've spoken to Sheila Fleet today about ordering a Scotgold ring with full provenance for our golden wedding in September. They're making a silver one to try for fit first as the design does not lend itself to alteration. The ultimate Scottish gold ring price will depend on forward spot, so bound to go up now.

One or two pieces still in stock from the BPT, but too small. Sheila's son who I spoke to is confident more gold is coming this Spring.

[pr100] 15/3/2021 08:53

Episode 2 of Gold Town was dismal viewing as the delays unfolded on camera. The lack of preparedness and contingency plans was plain to see - and it's still embarrassing to see the hapless Gray promising people back then that the mine would definitely be in production by the end of 2019. As we know, it was nowhere near production in March 2020 when Covid hit. Total shambles. They even chose the wrong groundworks sub-contractor whose large and heavy plant was unsuited to the terrain. Belatedly, they fired them and put their own mining crew to work instead of leaving them standing around doing nothing forever.

No doubt episode 3 will end in a blaze of fabricated glory on November 30 2020 - with the gold pour which we all know was a con. The TV crew needs to be back there now filming the unfolding tragedy for episode 4.