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Scotgold moves to bolster its cashflow

SCOTGOLD Resources has raised around £338,000 in a placement to bolster its cashflow as its new major shareholder concludes his agreed investment in the company.

The group mining for Scottish gold and silver said in February that Nat le Roux, the former chief executive of derivatives trading group IG and a non-executive director of the London Metal Exchange, was to take a significant stake in a staged investment of £1 million - half Scotgold's current £2m market value at yesterday's unchanged close of 0.5p.

Scotgold said yesterday that it had completed a placement of almost 76m shares (priced in Australian dollars) at an average price of around 0.44p.

A £1.5m borrowing facility from RMB Australia Holdings expires on August 11, and the company's latest quarterly cashflow statement last week showed it expected a cash burn of £400,000 in the current quarter, against cash reserves of just over £640,000. The group saw cash fall by £460,000 in the last quarter.

The investment by Mr Le Roux includes a commitment from both sides to establish a new company, called Marketco, which will market a proportion of the future gold and silver produced at Cononish in the form of doré bars.

The bars will be identified and marketed as Scottish gold and silver and Scotgold will sell to Marketco at a 10 per cent premium to the Comex Fix price, less costs. Scotgold will hold 40 per cent of the shares in Marketco, the investors 40 per cent, with the remainder held by public interest entities including the Strathfillan Community Development Trust.

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