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Scotgold issues warning over mine project

SCOTGOLD Resources has said it could complete design work on the key tailings management facility at its proposed gold mine in Argyll within one month of receiving funding for the project but warned that risks remain around planning permission.

The group, which is listed on the Alternative Investment Market and in Australia, yesterday issued an offer document for a £462,000 rights issue designed to buy it time to secure funding.

Scotgold told investors last month that it is scaling back its planned gold mine at Cononish significantly, citing difficult market conditions.

In the offer document Scotgold disclosed that it began design work for the tailings management ­facility, which would process waste from the mine, in January.

"Final designs and tender documents were at an advanced stage with six companies pre-qualified to tender for the works before work was halted in April 2013," Scotgold said. "Conclusion of this aspect of the development programme is expected within one month of resumption of project development."

Work on the design of the processing plant will begin when financing is secured, Scotgold added.

It said that 64% of conditions associated with planning permission for the project imposed by Loch Lomond and the Trossachs National Park had been met.

It said there is a risk the conditions might not be met.

Scotgold said it was in a position to ensure a "rapid start" to development once it gets funding.

Fundraising for the mine has been hit by the recent fall in the gold price. Its new scaled back plans mean that it now needs to raise around £10 million to start mining.

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