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Gold mining in Scotland

January 5, 2016

business, news

 

When I think of gold mining I generally always conjure up images of toothless prospectors trying to strike it rich in the California Gold Rush. I see checked shirts, sun-beaten faces, pick axes and sticks of dynamite. It’s quite incredible how powerfully popular media has influenced my perceptions of this industry.

A gold vein with a pick axe on top.

Image by Dennis Garrett, via Wikimedia Commons

One place I’d never dream to think of is the Highlands of Scotland, but lo and behold, plans to open a gold mine in the wilds of Scotland are at an advanced stage.

Difficult beginnings
Operating out of a former railway ticket office, entrepreneur Chris Sangster has been working towards opening up a gold mine near the tiny village of Tyndrum. He’s not the first to try and operate a gold mine in the area. In the eighties an exploratory tunnel was hewn from the side of the 2,900ft Beinn Chuirn. However due to problems obtaining the appropriate permissions several different owners had to give up on their gold digging dreams. Then, when the price of gold bottomed out at less than $300 an ounce in the late 90′s the project became financially unviable.

Things are pretty different nowadays, with Sangster having gained full permission to base his mine on the old exploration shaft and gold prices having grown massively in the last 5 years. At the time of writing, the price of gold is sitting at just over $1,600 an ounce.

Eastern promise
The huge rise in the value of gold is down to several factors. One of the biggest factors is fear; in these financially volatile times many investors are keen to have a portion of their cash in tangible, safe-bet assets such as gold. Another major factor which has been driving up the price of gold is a surge in demand from the east. With rapid economic growth in China and India has come a huge growth in the upper-middle-classes of these countries. This has led to large growth in demand for quality jewellery which has in turn boosted the price of gold.

An attractive but risky venture
It is this solid growth in gold prices which has made many smaller mining operations, such as Sangester’s, attractive to financiers. However, if the only gold mining operation on the UK mainland is to be successful, gold prices will have to remain high for a long period of time. The mine is expected to operate for at least ten years and a significant drop in gold prices in this time could scupper Sangster’s plans. Unfortunately, this is a distinct possibility as many analysts are worried that the rapid growth in China and India may not be sustainable. Should these economies slow significantly and the European and American stock markets stabilise there could be a marked drop in demand.

I, for one, hope that Sangster’s mine succeeds; there’s something quite gutsy and unorthodox about opening up a gold mine in the UK.

What do you think of Sangster’s chances of success? Share your thoughts in the comments box below.

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  • http://www.facebook.com/grassyllama Margaret Kay

    Wow, this is crazy. I’ve mined for gold before – when playing the computer game ‘Yukon Trail,’ so maybe I will join Sangster and make it rich!!