The Scotgold Resources Ltd (LON: SGZ) share price plunged 14.4% after releasing its annual results for the year ending 30 June 2022. The company generated total revenues of A$17.8 million in 2022, a significant improvement from the A$300,000 generated last year.
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However, the company’s pretax losses surged to A$10.8 million versus the A$5 million loss recorded in 2021. The firm attributed its higher losses to expanding its operations, including hiring new employees.
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Scotgold increased its staff by 156% from April 2021, when its new CEO, Phil Day, was appointed to 96 people, 51 of whom are from Scotland. The company is keen to become the employer of choice in Tyndrum, where its Cononish gold mine is located.
Investors reacted negatively to the news without considering the significant progress made by the company in bringing its Cononish Gold and Silver mine to full production. The company expects the mine to reach its full production capacity in 2023.
Scotgold achieved its phase I production target of 3,000tpcm/ 9,000 ounces of gold p.a. run rate in Q1 2022. However, the company did not stop here but increased its production capacity to 4,000tpcm/ 16,000 ounces of gold p.a. run rate by the end of October.
The firm is now focused on attaining its phase 2 mining production target of 23,500+ ounces of gold annually in 2023. The company’s operations remain cash generative, and it is only a matter of time before it becomes profitable.
The gold and silver mining company revealed that it intends to keep increasing its headcount in 2023 through internships, apprenticeships and bursaries similar to its program with the University of St Andrews.
Phil Day, Scotgold’s CEO, said: “Cononish is an exceptionally high-grade gold underground mining operation with a reserve grade of c.11.9g/t Au and has a current life of mine of 8.5 years with an estimated 555,000 tonnes of ore. Notably, even without any further resource exploration and expansion, Cononish's in-situ value is estimated to be £288 million, at current gold prices of £1,456 per ounce and projected All-in Sustaining cost (“AISC”) of £554 per ounce, will place Scotgold as one of the highest yielding – lowest cost gold producers globally once in full production in 2023.”
Scotgold’s prospects are promising, but I would wait for its share price to rebound before buying.
*This is not investment advice.
Scotgold share price.
The Scotgold share price plunged 14.41% to trade at 50.50p, from Tuesday’s closing price of 59.2p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.