Administration threat

Scotgold shares suspended amid uncertain future

The Cononish mine is struggling to survive

Shares in Scotland’s gold mine operator have been suspended from today as it is once again facing an uncertain future and potential administration over an unpaid debt.

Scotgold Resources, which owns the facility near Loch Lomond, said disappointing gold production and development means a significant capital investment is required and the company is actively seeking additional financing.

Discussions are at an advanced stage and, should they materialise, are expected to provide sufficient funding for the company to continue as a going concern.

However, it said the outcome of the 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.”

Debt providers have not been paid interest as it has fallen due, but they have agreed to payment plans and as such to date there have been no events of default.

One unsecured creditor has (recently) demanded full payment of outstanding interest, and although the company has sufficient funds to make this payment, it does not believe that to do so would be in the best interest of all stakeholders.

If the creditor does not agree to a new payment plan there is a material risk the business could be placed into administration in the next few weeks.

Trading in the company’s shares on the Alternative Investment Market have been suspended with effect from today.

“Notwithstanding the suspension of trading in the company’s shares, the Company will continue to make announcements as and when there are any developments that require announcement in accordance with its obligations under the AIM Rules,” it said.

A mine plan until July 2025 has been received and is under internal review. This plan supports the use of long hole open stope mining.  The cash flow implications of this plan are also under review.

Even though the plan is under review it is clear that Cononish needs significant new funding in order to increase ore production to a level which would achieve sustained profitability. The underground work envisaged includes significant development, a drilling programme and further upgrades to power and ventilation.

July and August 2023 gold concentrate shipments totalled 235 tonnes with a sales value of £1.9m. Scottish gold doré sales made to Scottish jewellery companies during July and August totalled £46,160.

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.