Scotgold raises £3m for production; shares fall 20%

Scotgold chairman Nat le Roux

Shares of Scotgold Resources Limited, the gold exploration and production company, fell more than 20% on Monday after it said it raised £3 million with a placing of 2.7 million depositary interests in the firm.

Scotgold said the money has been raised to “accelerate doubling of production at the Cononish Gold & Silver Mine and to increase exploration activities in 2021.”

Shares of Perth, Australia-based Scotgold Resources, which trade on AIM in London, have roughly doubled in the past 12 months to give the firm a stock market value of about £60 million.

Scotgold’s biggest shareholder with about 44% of its shares is chairman Nat le Roux, according to the firm’s website.

“Scotgold Resources Limited, the gold exploration and production company focused on Scotland, is pleased to announce that it has raised £3 million before expenses by way of a placing of 2,727,273 depositary interests of no par value in the company at a price of 110p per new ordinary share,” said the firm in a stock exchange statement.

“The proceeds of the placing will be used to accelerate plans to double production at the Cononish Gold & Silver Mine, which is on course to become Scotland’s first commercial gold mine by 30 November 2020.

“Funds will also be used to increase exploration activities, rolling out Scotgold’s systematic programmes across its 2,900km licence portfolio in the Grampian Terrane of Scotland.”

SP Angel Corporate Finance LLP acted as sole broker to the placing.

Scotgold CEO Richard Gray said: “We have an exceptionally exciting few weeks ahead of us as we make final preparations for our first gold pour at Cononish by 30 November. 

“As we ramp up production thereafter, the funds raised today will allow us to commit to the expenditures required to build on this anticipated momentum and accelerate the Phase 2 expansion project, whilst at the same time maintaining prudent cash reserves.

“With this strong cash balance in place, we have a clear path to realising the significant value that we believe Cononish and our additional prospects offer to investors.”