An Australian based company is trying to extract as much as 5.7 tonnes of gold from a mine in rural Scotland, bringing gold mining back to the UK for the first time in decades.
According to the Financial Times, Scotgold, which is based in Perth, Australia, but listed on London’s AIM share index, is restarting a project to mine gold in Cononish, Stirlingshire, which could eventually yield as much as 200,000 ounces of gold, if the company’s estimates are correct.
Scotgold first received approval to mine the site more than four and a half years ago in October 2011, but until now has not actually produced any gold. That looks likely to change as, according to the FT, the company is set to take delivery of large amounts of mining machinery this week. That machinery will allow the company to process the rock containing gold that will be drawn from the mine.
The equipment is expected to be put into use by May, as long as the company gets planning permission, and is a “significant milestone” going forward for Scotgold, according to chief executive Richard Grey. If planning permission is granted, the company will start to process around 7,000 tonnes of ore originally drawn from the mine during the 1990s, the last time anyone tried to get gold from Cononish.
Scotgold starting mining coincides with one of the biggest rallies in the price of gold in 30 years. In the first quarter of 2016, the price of gold has gained more than 15%, hitting a high of $1,272 per ounce in mid-March. It has since pared some of those gains, but is still trading well above the $1,200 mark, and at levels not seen since early 2015.
As well as a high market price for the metal, Scotgold expects to be able to sell gold for even more, because of its uniqueness. Grey told the FT that he expects Scotgold’s Scottish gold to command a “significant premium” over other types of gold, due to it being “100% Scottish.”
“This will get people holding the gold bars and saying ‘This came out of the mine last week’,” Grey said. “It will have an impact.”
That “significant premium” will be good news for Scotgold’s balance sheet. It has suffered substantial losses in recent years as it has tried to get the project online. In 2014, Scotgold booked a 1.2 million Australian dollar (£630,000) loss, and though that fell last year, it still saw 917,000 Australian dollars (£484,000) of losses.
Right now, the operation is expected to create only a small number of jobs, but as many as 60 people could be employed once the mine is fully functional.