The man behind Scotland’s first commercial gold mine reflects on a breakthrough decision
Chris Sangster can draw a line from Cononish in the Scottish Highlands to America, Canada and then back east to Norway and Sweden; the band of rock below that stretches these thousands of miles is known for containing precious metals and minerals. And at Cononish, there is gold.
Last Tuesday, plans to develop Scotland’s first commercial gold mine were unanimously approved by members of the Loch Lomond and The Trossachs National Park authority’s board.
For Sangster, chief executive of Scotgold Resources, it was a moment to savour; the company’s first application was turned down last year. Sangster and his colleagues had already spent years calming the nerves of investors who have poured millions of pounds into a dark, sodden hole in the ground.
“It was very significant to get planning permission, given the history last time around and even more so with a unanimous vote from the board which was very comforting,” said Sangster.
“There are some legal agreements to sort with the parks, but I don’t foresee a particular problem with those. And then we have to apply to the Crown Estate for a lease, but that’s pretty standard once you have a licence and planning permission. We are sorting the financing of the next stage, so hopefully around April next year we’ll begin pre-production work and will bring out the first gold in the first half of 2013.”
It could have happened long before; gold was first extracted in Scotland around 500 years ago on behalf of its ancient kings. In the 19th century, lead miners who cut dozens of tunnels into the hills here came within a few feet of discovering the gold that lies under Ben Chuirn.
In the early 1970s, geologists surveyed the area and marked it as possibly being gold-bearing. As the metal’s price rose over the next decade, the quest became more serious and a gold vein was discovered near one of the former lead mines.
An Irish company explored the area and estimated that it could produce five tonnes of gold and 25 tonnes of silver. In 1994 another company, Canadian Caledonian Mining Corporation, took over and Sangster, born to Scottish parents but brought up in Hertfordshire, joined it two years later. At the turn of the millennium, a fall in the price of gold put exploration on hold until 2007 when Sangster co-founded the Australia-based Scotgold Resources Ltd and bought the mine, just as prices began to rise again.
The price of gold has increased 57 per cent to more than $1,700 an ounce in the past two years while silver prices have almost doubled to $33.76 an ounce over the same period. Even if the price drops, the low production costs of Cononish will still make it profitable.
The failure of the company’s first planning application last year was unexpected, but Sangster and colleagues entered into discussions with the authority and worked hard to improve their proposal. As well as being within the park area, the mine is overlooked by a number of Munros, among them Ben Lui which is scaled by up to 15,000 climbers a year.
In its second application, Scotgold reduced the environmental impact of the mine and agreed to fund park conservation efforts, local community facilities and the development of a mining heritage visitor facility. It also commissioned an independent report from Professor David Bell, of Stirling University, to spell out the economic benefits of the mine, which increased previous estimates.
The company was supported by national groups such as Scottish Enterprise, which awarded the company a £600,000 grant, subject to planning permission, the Scottish Council for Development and Industry, CBI Scotland, the Scottish Chambers of Commerce, the Assay Office Scotland and the British Jewellers Association.
Iain Herbert, chief executive of the Scottish Tourism Forum, said: “Our members are incredibly excited at the proposed gold and silver mine, which will provide a superb tourism opportunity for the area. Visitors will be attracted, not only to the locality, but to Scotland as a whole in order to visit the country’s first commercial gold mine.
“This will enhance tourism spend and employment opportunities, as well as developing a jewellery manufacturing industry based on the true branding of ‘Scottish gold’. The firm has also done well to address environmental concerns through a comprehensive restoration strategy.”
John Riley, chairman of the Strathfillan Community Council added: “During the past months, the park authority and Scotgold have worked hard together to mitigate any environmental impact concerns. In light of this knowledge the community fully supports this second application, which will enable the realisation of immense social and economic benefits both local and national.”
In response to its second application, the park authority’s planning officer said: “The temporary adverse impacts are outweighed by the anticipated outcome of a higher-quality landscape and recreational experience being delivered in the long term.” National Park convener Linda McKay said: “Without question, this has been the largest and most complicated planning application we have ever had to consider.
“As guardians of some of the most stunning scenery in Scotland, it would have been easy to refuse the second application if we were considering the short-term impact on the landscape, but this National Park plans for long-term conservation management, and that includes having the vision to see beyond the temporary life of the gold mine.
“We also have a 30-year commitment to improve the wider Glen Cononish. The Greater Cononish Glen Management Plan will include extending existing native Caledonian pine forest and improving habitats and access tracks. This legally-binding agreement means the glen will regain its quiet, remote character following closure of the mine and the landscape will be improved from its current state.
“Overall, as a board we understand that there will be a temporary loss to Glen Cononish’s special character, but we have greater confidence that we can secure both long-term conservation gain and economic benefits to the local economy and Scotland.”
The company plans to extract 72,000 tonnes of ore from which 21,000 ounces of gold and 83,000 ounces of silver would be recovered annually over the mine’s ten-year life. It is thought that around £150m-worth of gold and silver could be extracted from the site, creating 52 jobs and £80m for Scotland’s economy during its projected ten-year lifespan. During this time and certainly beyond, the mine’s tourism potential will also be developed.
For Sangster, who has mined diamonds, copper and tin around the world, the decision is testament to a determination within the company to see the mine’s potential realised. “When the first application was turned down, that was a low point. But there was a strong desire to see it through and make it work,” he said.
About 5,000 ounces of the gold will be extracted as unrefined bars and identifiable as ‘Scottish gold’ – which would attract a premium from jewellers and goldsmiths because of its scarcity, traceability and the use of responsible mining practices. “There’s certainly great potential to develop a very strong brand,” he said.
Sangster does not allow himself too strong an emotional attachment to gold; he has shareholders in Australia and the UK to satisfy. “It’s the end value of the enterprise that matters,” he said. “Gold holds no particular personal attraction for me, although my wife does have a gold ring and it would have been great if it was made from Scottish gold!”
In addition to its flagship mine at Cononish, Scotgold has exploration licences for several other areas of the Highlands. It said in its annual report that it had continued exploration of its Glen Orchy, Glen Lyon and Inverliever licence area.
But, deep down, there probably is some sentimental significance to the prospect of bringing Scottish gold to the surface; as a boy, playing on the shingle beach outside his grandparents’ home at Spey Bay in Moray, Sangster’s geological interest was first stirred: “Most kids like rocks, throwing them, breaking them, looking for shiny ones; that must have stuck with me.”