The company mining gold and silver in Argyll has announced plans to raise between £1.5 million and £2m through a share issue.
Scotgold, highlighting “operational progress” at the mine at Cononish near Tyndrum, said the money would be used to purchase a more advanced drill rig and for working capital as development of the site continued.
The company added that the transition to the “long hole stoping” mining method at Cononish “has progressed well and is in line with management’s mine plan”.
Scotgold will raise the money through a subscription and open offer.
It said that, based on indications received, the directors expect that the open offer element of the share issue “will raise a minimum of £1 million”.
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Existing shareholders Maurice and Nicole Mason have subscribed directly for about £500,000 worth of shares, Scotgold noted. It added that the Masons had also undertaken to subscribe for about £500,000 of shares in the open offer.
Scotgold non-executive directors Nathaniel Le Roux, William Styslinger and Ian Proctor, and chairman Peter Hetherington, as well as significant investor Charles Outhwaite, have also undertaken to subscribe for shares in the open offer, which is priced at 15p a share.
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The shares closed at 16p on Thursday night.
Phil Day, chief executive of Scotgold, said: “Long hole stoping at Cononish is performing well. With the previous optimisation initiatives completed in 2022 in the underground mine and processing plant, we are now removing ore from the mine and producing gold concentrate through the processing plant in line with our mine plan."
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He added: "The additional funds raised will allow us to purchase a more advanced resolution definition drill rig, to further improve development of the underground mine and our grade control modelling. This will be invaluable as we progress towards full production at Cononish and for future development of its current eight-year mine life.”
Scotgold said: “Notwithstanding operational progress, the directors of Scotgold feel it would be prudent to raise additional equity funds now, both to procure a resolution definition drill rig, versus using a contractor drill rig, to bolster grade control modelling for mine planning and for additional working capital, as Cononish continues to be developed towards full production.”
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