Scotgold raising funds amid threat to operations
Shares in Scottish gold miner Scotgold slumped by more than 60% after it revealed it is raising $500,000 to ensure it can continue operating a seam at its mine near Loch Lomond.
In an update ahead of half-year results on Thursday it said recent mining performance has been below plan, largely due to lower than expected grades of ore, raising “going concern” issues.
It now needs to bring forward “long hole stope mining”, a widely used mining method in underground mining that supports cost effective and efficient extraction of ore.
The directors said that if the planned start of long hole stoping in April is delayed, or there is a shortfall in production, “then a material uncertainty would exist that casts significant doubt over the ability of the consolidated entity to continue as a going concern in the very immediate term and therefore its ability to realise its assets and discharge its liabilities in the normal course of business.”
Aside from raising cash, the directors have also discussed providing a short-term convertible loan.
“The ability of the consolidated entity to continue as a going concern over the long term will remain dependent on the quantity and grade of ore mined and processed being within a reasonable tolerance of the forecast quantity and grade and adherence to the planned product shipment schedule,” it said.
The company said it has also become aware that the email accounts of the executive directors have been accessed by unauthorised persons and “specious emails” sent in their names to numerous people.
“Whilst we believe the vulnerability has been fixed it is impossible to ever be certain of this. The police have also been informed on this matter and will continue to investigate,” it said.
Its shares, which hit 151p in 2020, closed 63.4% or 24.1p lower at 14p. The business is now valued at just £9.3m.