Emergency funds may be required
Scottish gold miner considers new cash call
Scottish gold mine operator Scotgold Resources says it may have to raise further capital to fund its operations close to Loch Lomond.
The directors are currently working with investment banking advisers on sourcing funding for the Cononish Project from debt and private equity providers and are hopeful of making progress.
Nevertheless, they say they are “mindful of the short and medium term working capital needs of the company and may need to consider addressing these separately in the light of the timing of the completion any project finance transaction for the Cononish Project.”
In a statement alongside annual results, the company says it may need to seek a further loan, a placement of AUS$2 million worth of shares or the sale of assets.
“While the board considers that the consolidated entity is a going concern it is also recognised that additional funding may be required to ensure that the consolidated entity can continue to fund its operations and further its mineral exploration and evaluation activities during the twelve-month period from the date of this financial report,” says the statement.
The Directors believe the company will obtain sufficient funding to enable it to continue as a going concern.
However, it says there is “material uncertainty that may cast significant doubt in relation to the consolidated entity’s ability to continue as a going concern and whether it will therefore realise its assets and extinguish its liabilities in the normal course of business.”
The company has received a “letter of financial comfort” from its major shareholder that amounts owing to him, but not due for payment until 31 March 2018 of AUS$1,742,964, will not be called for repayment until such time as the company is in a financial position to do so.
The consolidated loss after income tax for the financial year was AUS$1,348,167 (£788,588) against a 2016 loss of $1,505,592.
The first gold was poured in August 2016 in time for the official opening attended by local dignitaries and community representatives.
An initial offering of ‘Scottish Gold Rounds’ from the first gold produced was well supported with a significant premium being realised above the spot gold price. Subsequently, ‘Scottish’ gold produced on site has been sold, again at a significant premium to spot price, to two well known Scottish jewellers.
Operationally, the Company’s immediate focus remains the development of the advanced stage Cononish Gold and Silver Project in Scotland.
However, to provide continuity beyond Cononish, and potentially growth in overall production, the company is developing a pipeline of projects.
First of these is the Grampian Project which consists of 5 Option Agreements in Scotland and includes the highly prospective ground close to Cononish.
The Ccmpany is actively pursuing exploration activities on its substantial land position in the Dalradian group of the south west Grampians, which is highly prospective for both gold and potential base metal. The majority (85%) of the area currently under option to Scotgold is located outside the Loch Lomond and the Trossachs National Park.
Whilst advancing the Cononish project to production, the company’s strategy has been to conduct early stage regional exploration over the Grampian Gold project area in conjunction with follow up work on the more advanced prospects close to the Cononish project area.