Scottie Resources: Advancing a High-Grade Gold Resource in Canada Towards Production

Key Concepts

• Maiden Resource: The first official estimate of the quantity and grade of a mineral deposit.
• PEA (Preliminary Economic Assessment): An early-stage study that provides a conceptual analysis of the economic viability of a mining project.
• DSO (Direct Shipping Ore): Ore that can be shipped directly to a smelter or processing facility without significant on-site pre-treatment.
• Toll Milling: Processing ore at a third-party mill facility.
• Capex (Capital Expenditure): The cost of building or acquiring fixed assets.
• Opex (Operating Expenditure): The ongoing costs of running a business or project.
• NPV (Net Present Value): The difference between the present value of cash inflows and the present value of cash outflows over a period of time.
• All-in Sustaining Cost (ASIC): A comprehensive measure of the cost of producing one ounce of gold, including mining, processing, G&A, and sustaining capital.
• Inferred Resource: A mineral resource for which quantity and grade or quality can be estimated on the basis of limited geological evidence and sampling.
• Indicated Resource: A mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient for tentative application of mining methods.
• Baseline Environmental Studies: Studies conducted to establish the current environmental conditions before a project begins.
• Offtake Agreement: A contract where a buyer agrees to purchase a specified amount of a seller's future production.
• Royalty: A payment made to the owner of a mineral right for the extraction of minerals.

Scotty Resources: Transition to Development and Production

This summary details an interview with Thomas Mumford, President of Scotty Resources, at the Precious Metal Summit Conference in Zurich, November 2025. The discussion focuses on the company's significant progress in transitioning from an exploration story to a development and production-focused entity, particularly in light of favorable gold and silver prices.

1. Key Highlights and Achievements in 2025

• Maiden Resource: Scotty Resources announced its maiden resource estimate, quantifying 700,000 ounces of gold at a grade of 6 grams per ton (g/t). This is described as a "nice high-grade resource."
• Strategic Location: The project benefits from existing infrastructure, including proximity to a road and a deep-water shipping port, which is highlighted as a unique advantage.
• Preliminary Economic Assessment (PEA): The company completed a PEA, demonstrating the economic viability of the 700,000-ounce resource.
• Bulk Sample Program: A significant achievement was the completion of a 4,500-ton bulk sample of ore. This material was shipped to the Port of Stewart and is in the process of being sold. This program is viewed as a "mini version of our mine" and is expected to be net revenue positive.

2. Project Development Scenarios: DSO vs. Toll Milling

Scotty Resources is evaluating two primary development scenarios: Direct Shipping Ore (DSO) and toll milling.

• Direct Shipping Ore (DSO):
  • Status: This is the company's base case scenario and is considered the "risk-reduced version" of their operation.
  • Bulk Sample Application: The 4,500-ton bulk sample was mined via an open pit, with ore separated from waste, and then trucked (over 100 truckloads) to the Port of Stewart for overseas sale to Ocean Partners.
  • Advantages: This scenario bypasses the need for on-site processing and avoids the complexities and uncertainties associated with toll milling facilities.
• Toll Milling:
  • Option: The PEA demonstrated the economics of toll milling through Ascot, a mine and mill located approximately halfway between Scotty Resources' project and the port.
  • Challenges: The company expresses lack of confidence in Ascot's mill operating reliably, making this option less certain.
  • Benefits: Toll milling would involve half the transportation distance compared to shipping overseas and would eliminate overseas shipping costs.

3. Future Processing Strategy

• No In-house Mill: Thomas Mumford stated that Scotty Resources does not anticipate building its own mill. The company views building a mill as too time-consuming and complex due to permitting requirements.
• Preferred Options: The preferred operational strategies remain either direct shipping ore or toll milling to a third-party facility.
• Metallurgy: While metallurgy has been assessed for toll milling (indicating a cyanide leach as a suitable method), it is not a primary concern for the DSO scenario, as the ore goes directly to a smelter.

4. Economic Projections and Key Metrics

• Current Gold/Silver Prices: The interview references current prices of approximately $4,100 per gold ounce and $49.95 per silver ounce.
• Project Economics (at $4,000 Gold):
  • NPV:
    • DSO: Approximately $600 million.
    • Toll Milling: Over $800 million.
  • ASIC (All-in Sustaining Cost):
    • DSO: Approximately $1,400 - $1,450 per ounce.
    • Toll Milling: Drops below $1,000 per ounce.

5. Path to Production: Requirements and Timeline

• Capital Expenditure (Capex): The estimated capex to build out the project is $128 million Canadian. This figure is consistent for both DSO and toll milling scenarios.
• Long Lead-Time Items: The primary hurdles to production are permitting and resource category upgrades.
  • Permitting: Contingent on:
    • Baseline Environmental Studies: A two-year study that commenced in the summer.
    • Resource Upgrade: Moving the resource from the "inferred" to the "indicated" category, which requires an additional drill season.
  • Timeline: Approximately 1.5 years remaining for baseline studies and environmental work, followed by another drill season.
• Financing:
  • Current Status: The company is not fully financed for the entire capex.
  • Next Steps: They have identified pathways for raising the necessary funds.
  • Next Year's Funding: An estimated $25 - $30 million is required for the upcoming year.
  • Project Finance: The company has an offtake agreement and a 2% royalty. They anticipate a debt structure for project finance, potentially around 70% debt to 30% equity.
• Production Timeline: If all plans proceed as expected, full production is targeted for summer 2028.

6. Byproducts and Shareholder Structure

• Commodities: The primary commodity is gold, with silver as a minor byproduct. The gold-to-silver ratio is approximately 1:1 (one gram of silver per gram of gold).
• Largest Shareholders:
  • Ocean Partners: Over 10.5%.
  • Ross Bey: 5%.
  • Brad (CEO): Approximately 4%.
  • Kevin Jennings (Strategic Advisor): Approximately 9%.
  • Eric Sprat: 4-5%.
  • Management also holds a significant stake, contributing to a protected shareholder structure.

7. Wish List for the Coming Year

• Gold Price: Continued upward movement in the gold price.
• Company Specific:
  • Finalizing Permitting Pathway: Narrowing down the exact permitting strategy.
  • Drill Results: Achieving "fantastic drill results" from their largest drill program to date, expected to exceed 30,000 meters.

8. Conclusion and Outlook

Scotty Resources is on a clear trajectory towards production by 2028, with a robust resource, a low-risk DSO base case, and a manageable capex of $128 million Canadian. The company's strategic location and progress on key long-lead items like environmental studies and resource upgrades position it well for future development. The interview concludes with optimism for continued success in drilling and permitting, aiming to bring this new gold mine into production.