Embattled Scotgold Resources ready to go into administration
Struggling Scotgold Resources, which operates Scotland’s only gold mine, is planning to appoint administrators over the coming days as financing talks announced last month failed to attract investment.
The gold miner went into a trading halt in September as it wasn’t certain it would be able to secure enough cash to continue operating the Cononish mine. A few days later, the company put staff on unpaid leave “until further notice” and warned the lack of financing could result in the appointment of administrators.
The latest announcement could potentially deal Scotgold a fatal blow, crushing its hopes for making the Cononish mine the catalyst of a gold and silver mining revival in Scotland.
Scotgold Resources received initial approval for Cononish in 2018 and poured first gold in December 2020 and achieved commercial production in July 2022.
In March this year, the miner shocked shareholders by announcing that its gold grades, revenues and working capital had suddenly deteriorated to a point where its ability to keep operations going was in question.
It cited failed efforts to optimize production using what it considered a more cost-effective method of mining called long hole stoping. Any delays in switching to the new process, the miner warned at the time, would inevitably put a strain on its finances.
In July, the company launched a third-party review of its operations, which found there were no “fatal flaws” in the mining resource estimate and grade control modelling process. It also concluded, however, that an initial assessment of the draft mine plan and associate cash flow forecasts required “significant capital investment.”
