Inevitable — that was my remark to Isabel when I read the Scotgold story. It was all about a little Australian company which has raised money on the Australian stock market to mine for gold in a beautiful tourist area of Scotland. Now gold is on the road to $1,000 an ounce everyone can combine their dreams! Look out for would-be rich explorers wandering through the vineyards, across beaches and other good places to be. Don’t say we didn’t warn you!
Isabel’s history lessons came back. It is a long time since Scotland had a gold rush, although the Romans mined it. Apparently there was a short-lived one in 1869. That was in the Ladhills-Wanlock area. Alluvial gold was found in several burns which are tributaries of the Northern Scottish Helmsdale River.
The history books say the original diggings there were stopped by the Duke of Sutherland. Damage was being done to his fishing in the Helmsdale by the silt carried from the diggings. The diggers may also have been partial to salmon and deer! Today the gold is panned on a recreational basis with the permission of the estate.
Isabel and I, every hopeful, have been pouring over the maps. Personally, I find the prospect of the fishing appealing, too!
There is gold in small quantities in all number of places. Tiny traces of gold are found in many streams and rivers draining the older rocks found in the north and west of Britain. The best known localities include the area north of Dolgellau in Wales, the Southern Uplands of Scotland and those Helmsdale streams.
At some places prospectors will find guidance locally. The Mining Museum at Wanlockhead is apparently one place.
A$6m and gold already found
Perth (in Australia) based Scotgold is not wandering around any burns. It hopes it offering a cert based on gold already found. In November 2007 Scotgold launched a prospectus to raise A$4 million through the issue of 16,000,000 shares at A$0.25 each. A further A$2 million was raised because of oversubscriptions. Trading started yesterday (January 15).
What it had already done was buy a company that had done a good bit of work. Scotgold acquired UK registered Fynegold Exploration in May last year for £800,000. It came with exploration licences over 2,200 square kilometres in the Grampians in central Scotland. The company had started up working at Cononish, but stopped with the downturn in the gold price in the late 1990s. So its workings have been mothballed on a care-and-maintenance basis for 10 years.
"Much of the hard work has already been done for us," says chairman and founder, geologist Shane Sadleir. "The previous owners carried out exploration on the project over some 15 years."
This included diamond drilling and the construction of a 1.2km tunnel along the gold vein. There was planning approval for a small mining operation of 25,000 ounces of gold per annum.
A number of near mine targets
There are, says Western Australia broker, Montagu Stockbrokers, a number of near-mine targets at the Cononish silver-gold deposit. The analysts reckon, however, that their remain a lot of unidentified prospects. What has already been estimated historically is a total mineral reserve of 564,656 tonnes, grading 10.55gpt gold, and 55gpt silver. There is an additional mining reserve that is not too different.
Scotgold has carried out an initial review of historical data. Now it expects to be signing drilling contracts shortly. In 2008 these will focus on drilling defined to increase the extent of known gold and silver mineralization. Then on to the next steps (fingers crossed) of a Bankable Feasibility Study and a mine plan. It is in a hurry to get on.
Apart from anything else, it needs to put the data in order to make it comply with the latest codes of resource reporting. It hopes for a draft report in the next three months.
If all goes well, Scotgold will not be sending its gold just anywhere. The plan is to sell it to local jewellery manufacturers. Then it can be retailed to the tourists as "Scottish gold".
There is also the prospect of barite-zinc here.
The stuff of dreams
This is largely a local operation despite its address and shareholders, with links to Scotland via the board. Chief Executive is Chris Sangster, a graduate of the Royal School of Mines in London, with honours in mining and engineering. He lives in Comrie in Scotland and worked as general manager at Cononish for four years up until 1999. Dr Ron Thom, Scotgold's exploration director, was born and educated in Scotland. He graduated from the University of St Andrews, and gained his PhD in structural geology at the Royal School of Mines.
Scotgold’s chairman Shane Sadleir is keen, too, to emphasis the company’s environmental credentials. A soil scientist, he spent 11 years of his career with the Environmental Protection Authority in Western Australia.
Sadleir has a long background with small quoted Australian explorers after starting at Alcoa. He has been involved with Bannerman Resources, Trafford Resources and Athena Resources.
As yet, with an initial market cap of around A$15m and lots more work do, Scotgold’s fortunes remain the stuff of dreams. Like those fish in the burns whenever I bring out my rod! It is still early days. Recently it has been the black gold that brought Scotland its wealth. Now, perhaps it is another mineral’s time.
Keep dreaming!
Erin and Isabel.
