The Scotgold Resources Ltd (LON: SGZ) share price rallied 20.4% after revealing that it had received a US$500,000 advance payment from its gold offtake partner to meet its short-term working capital needs after commencing long-hole stoping.
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The mining company said it would repay the loan by offsetting US$100,000 against its monthly gold concentrate shipments to its offtake partner from July to November 2023. The loan is set to attract an annual interest payment based on the Secured Overnight Financing Rate (SOFR) + 4.5%.
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Furthermore, Bridge Barn Limited, a company owned and controlled by Mr Nathaniel le Roux, a non-executive Director at Scotgold, provided the debt funding to the Company and agreed to postpone the interest payments due and payable to Bridge Barn up to 1 December 2023. The firm deferred total interest payments of £450,000.
Scotgold commenced long-hole stoping on 4 April 2023 and with the first blast in the eastern section of the 430 West drive. The first ore has already been delivered to the processing plant ROM pad for processing today and will produce gold concentrate for sale.
The company completed the drilling of the first stop, consisting of 70 holes and 950 metres of drilling in the last 10 days and within the planned timeframe. The firm noted that the fast execution of its long-hole stoping plans showcased its dedication to transitioning the mine into long-hole stope mining.
Scotgold is currently conducting long-hole stoping along a 115m strike in the eastern section of the 430 West drive. Investors were pleased by the progress made by the company over a short period.
The company’s shares crashed to new lows on 27 March 2023 after issuing an operations update warning that it had to fast-track its transition into long-hole stoping after the quality of ore mined via level development and cut and fill stoping fell drastically.
Scotgold has since made the shift to long-hole stoping, but it is still too early to tell whether the new mining method will lead to higher quality ore and higher gold concentrate production by the mining company.
*This is not investment advice.
Scotgold share price.
The Scotgold share price surged 20.4% to trade at 15.05p, from Tuesday’s closing price of 12.50p.
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