Gold mine at risk of plunging into administration

The owner of Scotland’s only commercial gold mine has warned it is at risk of plunging into administration.

Scotgold Resources has suspended trading in its shares on the London Stock Exchange and says it needs “significant” funding to allow the firm to continue as a going concern.

The announcement comes after the company said in July it was undertaking a third-party review of its operations following “disappointing” production figures for the first half of the year.

Production was affected in the first quarter of 2023 after a key development was halted due to declining gold grades.

Only 758 ounces of gold were produced at Cononish, near Tyndrum, between January and March, although gold concentrate production steadily increased in the second quarter to reach 1,556 ounces (2,314 ounces overall).

The company said 1,033 ounces of gold were produced in July.

The July and August gold concentrate shipments totalled 235 tonnes with a sales value of £1.9m.

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Scottish gold doré sales made to Scottish jewellery companies during those two months totalled £46,160.

In June, chief executive Phil Day announced he was stepping down in order to spend more time with his family in Australia.

The AIM-listed business said on Monday that while the geological data suggested “no fatal flaws” in its survival plan, the company would require “a significant capital investment”.

The firm said: “The company is actively seeking additional financing and discussions are in an advanced stage and, should they materialise, are expected to provide sufficient funding for the company to continue as a going concern.

“The outcome of the funding discussions is highly uncertain and if the company cannot conclude a significant fundraise, it will cast material uncertainty for the company to continue as a going concern.”

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It said one unsecured creditor had recently demanded full payment of outstanding interest.

Although the firm had enough funds to make the payment, it was not deemed in the “best interest of all stakeholders”.

Scotgold Resources added: “As such an event of default is possible if such creditor does not agree to a new payment plan.

“In the event of default there is a material risk the business could be placed into administration in the next few weeks.”