Scotgold Resources Limited, which owns the Cononish Gold and Silver Mine near Tyndrum, announced it conditionally raised gross proceeds of £2.5 million through a share placing and subscription at 40p per new ordinary share — a discount of roughly 35%.

Scotgold shares fell about 30% to 40p.

Scotgold said the net proceeds of the capital raising will primarily be used to support delivery of the company’s 2023 mine plan “and the move to long hole stoping” at Cononish, to support resource expansion at Cononish “and to support Scotgold’s regional exploratory drill programme, where the company holds 2,900km2 of licences in Scotland.”

Seven directors of Scotgold and a significant shareholder are participating in the subscription for a total of 1,435,000 shares with a total value of £574,000.

Conditionally, a total of 6,250,000 new shares will be issued, about 9.48% of the enlarged share capital.

As part of the capital raising, Scotgold is launching a separate retail offer of up to 1,250,000 new ordinary shares at the placing price to raise up to a further £500,000.

Bridge Barn Limited, a company owned and controlled by Scotgold director Nathaniel le Roux and provider of debt funding to the Scotgold, “has agreed the option to defer a total of £2.5 million capital repayments due by the company in calendar year 2023 by up to nine months from the due date.

In the event of deferral, an interest rate of 13%, non-compounding, will apply for the deferral period. The current interest rate is 9%.

“The potential deferral of capital repayments would be used to further exploration work – Resource Definition drilling in Cononish and exploration work on the wider Grampians area,” said Scotgold.