THERE are warnings that the company operating Scotland’s only gold mine could fall into administration in the next weeks.
Bosses at Scotgold Resources, which operates the Cononish gold and silver mine near Tyndrum, said the business could be at risk if a new payment plan agreement is not reached with an unsecured creditor.
The company stated that following a third-party review of the mine plan, it was apparent that significant capital investment was required.
However, it also acknowledged that ongoing funding talks could be unsuccessful, potentially plunging the mine into crisis.
In a statement released to the stock market on Monday, Scotgold said: “While the geological data and documentation suggested 'no fatal flaws' in the MRE (mine resource estimate) and GC (grade control) modelling process, the draft mine plan and associated cash flow forecasts are currently being reviewed by the company, but they indicate that to deliver to the plan, a significant capital investment is required.
“The company is actively seeking additional financing and discussions are in an advanced stage and, should they materialise, are expected to provide sufficient funding for the company to continue as a going concern.
“The outcome of the funding discussions is highly uncertain and if the company cannot conclude a significant fundraise, it will cast material uncertainty for the company to continue as a going concern.”
It added: "One unsecured creditor has (recently) demanded full payment of outstanding interest, and although the company has sufficient funds to make this payment, it does not believe that to do so would be in the best interest of all stakeholders.
“As such an event of default is possible if such creditor does not agree to a new payment plan. In the event of default there is a material risk the business could be placed into administration in the next few weeks.”
The company said that the first half of 2023 had been “disappointing” for gold production, and that its viability as a business depended on the quantity and grade of ore it was able to produce being in line with what was originally forecast.
