Troubled gold miner Scotgold Resources has put the majority of its employees on short-term unpaid leave as it holds talks with an administration specialist “as a precautionary measure”.

Scotgold, which employs around 80 people at the Cononish gold and silver mine near Tyndrum, told the stock market that it has taken the steps while efforts to secure an emergency funding deal take place.

Scotland's only commercial gold miner said the funding talks are “at an advanced stage with confirmatory diligence being undertaken”. But it added: “These have not yet reached final agreement and as such the company is in discussion with an administration specialist as a precautionary measure in the event it cannot secure financing and needs to appoint an administrator”.

READ MORE: Glasgow: Pub giant to relaunch Sir John Moore

The company has put the bulk of its employees on unpaid leave until further notice, allowing it time to focus on the funding talks and “preserve funds to help retain some key trained staff members across mining and plant and maintenance”.

“This care and maintenance team will maintain the company's assets and ensure compliance with statutory, regulatory and environmental reporting obligations for the immediate future,” it added.

The developments are the latest to unfold in a deeply challenging year for the company. It first raised concerns over its ability to continue as a going concern in March when it disclosed that significantly less mineralised ore would be yielded from the Cononish mine than initially envisaged.

It shifted its mining strategy in a bid to make the most of the resource but warned that if there was a delay to the start of the new approach - involving a technique known as long hole stope mining- or if the yield was subequently below plan, "then a material uncertainty would exist that casts significant doubt over the ability of the consolidated entity to continue as a going concern in the very immediate term".

It subsequently warned on September 11 that there was a “material risk” it may fall into administration in the next few weeks, with shares in the company suspended after it told the City it could fail if a new payment plan is not agreed with one unsecured creditor.  The company did not disclose the identity of the creditor or the size of the debt.

Scotgold said at the time that while a review it commissioned in July found no “fatal flaws” in the mining resource estimate and grade control modelling process, initial assessment of the draft mine plan and associated cash flow forecasts indicate that  “significant capital investment is required”.

READ MORE: Shares surge in owner of Glasgow's famous Horseshoe Bar

It also noted then that talks with investors over additional financing were at an “advanced stage and, should they materialise, are expected to provide sufficient funding for the company to continue as a going concern”.

That update was followed with a statement on September 19 in which the company said the talks were ongoing and again warned that failure to conclude a "significant fund-raise" would "cast material uncertainty" over its ability to continue as a going concern.

Yesterday, the outlook for the company looked to have darkened further with the news that it had put the majority of its employees on short-term leave and opened talks with an administrator as a precautionary measure.

Scotgold said in a statement on Frdiay: “The company is cognisant of its obligations to its creditor base and has accumulated arrears which it is intended will be addressed if a successful re-finance is achieved.

“Nonetheless, a creditor has recently taken action which the board hope to resolve through negotiation of a repayment proposal. Should matters not be successfully resolved this could reduce the timescale to achieve a funding solution and necessitate an administration appointment, which of course it is hoped can be avoided.”

The biggest shareholder in Scotgold is non-executive director Nat le Roux, who holds a 33% stake. Its other biggest shareholders are directors of the company.

Reporting its interim results to the stock market in March, the company stated that net debt stood at A$25m million (£12.85m) on December 31, 2022.

The company has already turned to investors to support its plans this year. A subscription and open offer raised £2m in May, which came after £3m was generated by a placing and retail offer in February.