Scotgold staff on unpaid leave amid cash talks

Scotgold Resources Limited, which owns the Cononish Gold and Silver Mine near Tyndrum, said on Friday it placed the majority of its employees on short term unpaid leave until further notice “allowing the company time to advance the financing discussions and preserve funds to help retain some key trained staff members across mining and plant and maintenance.”

Scotgold said this care and maintenance team “will maintain the company’s assets and ensure compliance with statutory, regulatory and environmental reporting obligations for the immediate future.”

On September 11, Scotgold said trading in its shares would be suspended immediately “pending clarification of its financial position.”

Scotgold said a significant capital investment is required for the firm.

On Friday, the firm said in a stock exchange statement: “On 19 September 2023, the company announced an update on the Mining Plus review and that while the Geological data and documentation suggested ‘no fatal flaws’ in the MRE and GC modelling process, the draft mine plan and associated cash flow forecasts indicate that to deliver to the plan, a significant capital investment is required …

“Financing discussions are ongoing, they are at an advanced stage with confirmatory diligence being undertaken.

“These have not yet reached final agreement and as such the company is in discussion with an administration specialist as a precautionary measure in the event it cannot secure financing and needs to appoint an administrator …

“The company is cognizant of its obligations to its creditor base and has accumulated arrears which it is intended will be addressed if a successful re-finance is achieved.

“Nonetheless, a creditor has recently taken action which the board hope to resolve through negotiation of a repayment proposal.

“Should matters not be successfully resolved this could reduce the timescale to achieve a funding solution and necessitate an administration appointment, which of course it is hoped can be avoided.”