By Ian McConnell

Scotgold has raised £1.5 million from a share placing as it endeavours to ramp up production at its Cononish mine near Tyndrum in Argyll.

The company, which has faced challenges in its production efforts at the gold and silver mine, has raised the money to meet additional working capital needs ahead of the project becoming “cashflow positive”.

Scotgold told the stock market yesterday: “The proceeds of the placing will be used for working capital through the current production ramp-up period at the Cononish gold and silver mine.

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“Although progress has been made resolving the various production issues encountered, the lag between the timing of the re-estimated production build-up and sales receipts means that further working capital is required before the project becomes cashflow positive. The funding raised today is intended to fulfil this requirement.”

It noted Bridge Barn, a company owned and controlled by Scotgold chairman Nat le Roux, would provide additional debt funding of £500,000 if further finance were required.

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Scotgold confirmed mining sector veteran Phillip Day would join its board today as chief executive.

He succeeds Richard Gray, who has led Scotgold since October 2014 and is retiring from his executive role.

Scotgold said in February that Mr Gray would “continue to support Scotgold as a non-executive director”.

It revealed then that “the slower than anticipated labour build-up and training, due in part to the current Covid-19 restrictions", was "expected to impact production at Cononish in March”. It also declared in February that “some issues remain with the filter press operations and the company is working with the manufacturer and its agents to resolve these”.

Updating the stock market yesterday, Scotgold said: “Covid-19 continues to have an impact on the Cononish mine’s overall development schedule, as reported on 26 February 2021. The company has investigated the possibility of utilising the coronavirus business interruption loan scheme – however it is deemed ineligible under the current rules.”

It added: “The filter press issues…have continued through most of March, hampering a ramp up of production, although progress resolving these issues has been made in recent days. Once fully resolved and with more continuous steady state plant operations achieved, the company expects a further period of ‘bedding in’ and optimisation before all design parameters are achieved.”

Scotgold declared yesterday that, in spite of the “continued delay to ramp up”, it still expected production for calendar year 2021 to be within the guidance range previously provided of between 28,500 tonnes and 25,700 tonnes of ore processed, and between 7,900 ounces and 7,000 ounces of gold produced.