The problems are piling up fast for Scotgold Resources, the company which operates Scotland’s only commercial gold mine.
In the latest of a series of concerning announcements that it has made to the stock market this year, Scotgold said today that it has taken the “precautionary” step of opening talks with an administration specialist as efforts to secure emergency funding continue.
Moreover, the company has put the majority of its 80 employees on short term unpaid leave to give it time to focus on funding talks and preserve sufficient cash to maintain a care and maintenance team at the Cononish mine near Tyndrum, where back in 2020 it poured the first commercial gold in Scotland.
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The prospect of seams of gold lying untapped beneath the ground in Scotland has appeared not only romantic but commercially enticing since the 1980s, when gold was first discovered at Cononish.
But efforts to establish the mine and extract the resource in recent years have proven to be extremely challenging and costly for Scotgold, which has been involved in the project since 2007. The company and its investors have enjoyed some success, with their perseverance rewarded with the extraction of some gold that has ultimately been supplied to the jewellery trade.
However, the project has encountered plenty of bumps along the road, and none more so than this year.
The first sign of serious problems emerged in March, when Scotgold was forced to warn that a “material uncertainty would exist” over its future amid concern over the performance of the mine. In short, the yield from the mine was of lower quality than anticipated, forcing the company to pursue a new mining strategy. But even with the new approach there would be no guarantee of success.
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Scotgold has regularly updated the market on its progress since, and it has seemed that with each missive the outlook has become steadily darker, with significant uncertainty now hanging over the financial viability of the project in its current form.
The announcement today that the company has held precautionary talks with an administrator and put the majority of staff on unpaid leave will certainly not inspire confidence that the future is golden for Scotgold and the Cononish project.
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