Cononish Financing Update

RNS Number : 8914T

Scotgold Resources Ltd

26 November 2013

 

26 November 2013

SCOTGOLD RESOURCES LIMITED

("SCOTGOLD" OR "THE COMPANY")

CONONISH FINANCING UPDATE

Since publishing the results of the Cononish Gold and Silver project Development Study in April 2013 (see release Cononish Development Study Results 30/04/2013), the Company has sought a number of alternatives to finance the proposed development and bring it into production within a reasonable time frame. However, access for the Company to the requisite funding described under the Development Study remains difficult.

The Company has identified a number of possible 're-engineering' opportunities to advance Cononish whilst reducing the capital required to bring the project to production. The board believe that these opportunities have considerable merit under current market conditions.

Accordingly, the Company is in the early stages of considering a smaller initial project, treating higher grade material within the resource through a smaller processing facility.  Examination of the Cononish resource indicates an overall 'higher' grade zone above the current adit suitable to be mined separately from other lower grade material above and below this. Internal, 'pre - scoping' estimates indicate that the capital expenditure could be reduced significantly. Mining of the higher grade initial portion of the resource would not preclude mining the balance of lower grade material should gold prices and cost profiles be suitable at that stage but this would have to be decided under a separate mine plan.  Any alteration to the project will necessarily require discussion with the Loch Lomond and the Trossachs National Park Planning Authority.

The Company has requested that an extension to the RMB loan be made. It is envisaged that the period of extension is likely to be directly related to the amount of working capital available, consistent with the terms of the existing loan which require a minimum of three months working capital to be held in cash.  As separately announced today, the Company is also undertaking a rights issue to raise further working capital.

In addition, the board has been advised by the board of Luiri Gold Ltd ("Luiri"), the 100% parent of Zio Holdings Ltd which took part in a placing in September 2013 with a view to carrying out due diligence on Scotgold's assets, that Luiri will not, in the light of the current market conditions, pursue a corporate transaction with the Company.

Luiri currently holds a 4.5% interest in the Company's issued share capital

For further information please contact:

United Kingdom:

Scotgold Resources Limited	Westhouse Securities Limited	Bankside Consultants
John Bentley (Chairman) Tel: + 44 (0)7785 921505 Chris Sangster (CEO)	Richard Baty / Martin Davison	Simon Rothschild
Tel: [phone]	Tel: [phone]	Tel [phone]

Australia:

Scotgold Resources Limited	Professional Public Relations
Peter Newcomb (Company Secretary)	Belinda Newman
Tel:          [phone]	Tel:          [phone] Mobile:   [phone]

Background

Scotgold Resources

•              Scotgold Resources is a mining exploration and development company listed on the Australian Securities Exchange in January 2008 and the AIM market of the London Stock Exchange in the UK in February 2010.

•              The Company was formed with its sole focus on exploring for gold and silver in Scotland, with the already identified Cononish Gold and Silver Project as its core asset. Once in production, the Project will be Scotland's first commercial gold mine.

•              The Company holds Crown options of some 4200km2 covering the highly prospective Dalradian terrain in the SW Grampians of Scotland

•              Scotgold acquired the Cononish Gold and Silver Project in 2007 and has been working towards bringing the project to production in conjunction with its ongoing exploration efforts at Cononish and in the south west Grampians.

•              In July 2011 Scotgold submitted its reapplication for planning permission, which was recommended for approval in October 2011 subject to finalizing conditions and various legal agreements

•              In February 2012, the Decision Notice granting planning permission was issued by the Planning Authority and the Crown lease granted in May 2012

 

END

 

 

MSCFEIFWIFDSESF