SCOTGOLD Resources has reached a major milestone in its quest to bring gold extracted in Argyll to market as the company revealed it has secured the first sale to the jewellery trade in Scotland.

The listed miner, which is bidding to establish a gold mine close to Tyndrum in the west of Scotland, has agreed deals to sell gold to two “pre-eminent” Scottish manufacturing jewellers.

The announcement saw the share price rise as much as 12 per cent during the day, before closing unchanged at 0.475p.

The deals cover the first refining batch of Scottish gold, weighing around 16 ounces, made available for jewellery from the company’s bulk processing trial (BPT) at Cononish, yielded from a stockpile next to where it aims to establish gold and silver mine. The stockpile had been created as a result of excavation worked carried out by previous site owner Ennex.

It is only the second batch of gold to be extracted from the trial, which has been described as the “most tangible and exciting” development at the company since its formation more than a decade ago.

Scotgold chief executive Richard Gray said: “This is yet another pleasing milestone and validates our belief in the strength and value of combining Scottish gold of proven provenance with the skill and prestige of the Scottish jewellery industry.”

Ed Thomas, an analyst at Stockdale Securities, said while the deals were not hugely significant in revenue terms, they were a “very positive step forward” in the company’s progress.

Scotgold did not disclose the identity of the manufacturing jewellers, or how much the deals are worth. However the company noted the premium received was in excess of the 30 per cent reserve stipulated for the Scottish Gold Rounds it auctioned in November.

Scotgold revealed then it had achieved £120,000 from the first round of Scottish gold in the auction, which was held by accountancy firm Scott-Moncrieff. A total of 10 rounds were successfully auctioned, the company reported in November, with lots fetching an average of £4,557.90 per ounce.

Each of the rounds auctioned by Scotgold were minted by Baird & Co Bullion Merchants, the appointed refiner, and stamped with the Sottish Gold Mark of the stag’s head. Announcing the auction results in November, Mr Gray outlined his hopes the auction would be followed by the company’s first deals with the jewellery trade. “This unique and historic event is the first demonstration of our ability to attract a premium for Scottish gold,” he said.

The sales agreement outlined by Scotgold yesterday includes conditions for the use and marketing of Scottish gold. These guidelines, the company said, are designed to protect the brand of the precious metal, underpinning the basis of future sales.

Scotgold noted yesterday Baird & Co had “significant input” into the agreement with the jewellery manufacturers, along with the Edinburgh Assay Office, which will “verify the Scottish gold’s provenance through a closely monitored chain of custody”.

Scotgold added: “Overall management of these negotiations was undertaken by The Dragonfly Initiative as Scotgold’s appointed consultant to manage the marketing and commercialisation of the company’s Scottish gold.”

Scotgold has been processing material from a stockpile it inherited from Ennex alongside longer term plans to establish a mine.

It hopes that by, undertaking the trial and not proceeding straight to creating a mine, it will radically reduce the cost of extracting gold at Cononish.

Along with producing gold for the jewellery trade, Scotgold’s BPT is continuing to yield gold in the form of Pyrite concentrate from the BPT. Around 53 WMT (wet metric tonnes) have so far been shipped and sold under an agreement with Ocean Partners, a Dutch-based metals trading specialist, in November – a deal which marked its first major sale of commercial metal from the Argyll mine.

At the time of the Ocean Partners deal, Scotgold estimated that 91 ounces of gold could be extracted from 1,100 tonnes of treated stockpile material at the site.

The metal was contained within the 13.5 tonnes of pyrite concentrate which had been generated by October 26.