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Insider UK
Insider UK
Business
Peter A Walker

Scotgold raises £2.5 million to expand production

Scotgold Resources has conditionally raised gross proceeds of £2.5m through an offering of 6,250,000 shares at a price of 40p per share, representing approximately 9.48% of the enlarged share capital.

Following the accelerated book-build announced on 9 February, seven of the company's directors of - and a significant shareholder - participated in the subscription for a total of 1,435,000 shares with a total value of £574,000.

Shore Capital acted as sole bookrunner to the company which operates Scotland's only gold and silver mine, near Tyndrum.

As part of the capital raise, Scotgold launched a separate retail offer of up to 1,250,000 new ordinary shares on the BookBuild Platform to raise up to a further £500,000.

Further to the raise, Bridge Barn - a company owned by Nathaniel le Roux which has previously provided debt funding - agreed the option to defer a total of £2.5m capital repayments due by the company during 2023, by up to nine months from the due date.

The potential deferral of capital repayments will be used to further exploration work, including resource definition drilling at Scotgold's main Cononish mine and exploration work across the wider Grampians area.

Earlier this year, Scotgold revealed that as a result of impacted fourth quarter gold production and sales, its financial and working capital position has been "adversely affected", with a current cash balance of around £350,000 and a net debt position of £12.6m.

A fourth quarter trading update explained that the problems were primarily due to changing the short-term mining schedule to expedite continuous long hole stoping in the western areas of the mine, as well as weather conditions in December.

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