Scotgold Resources, Scotland’s only commercial gold producer, is running out of lifelines to stay afloat.
The company is desperately tring to shore up its balance sheet and warned last week it may go into administration.
It also revealed it had put staff on unpaid leave “until further notice”.
Scotgold became Scotland’s only commercial gold miner when it started operations at Cononish, near Tyndrum in Argyll, a few years ago.
Bosses assessing their ‘remaining strategic options’
In a brief announcement to the London Stock Exchange this morning, the firm said funding talks were ongoing but its “most advanced prospective investor” had walked away.
The firm added: “The directors are assessing the remaining strategic options open and are in discussion with existing funders which could result in the appointment of administrators over the coming days.”
Trading of Scotgold’s shares on London’s Alternative Investment Market was suspended last month when it said it needed “significant” funding to continue as a going concern.
In an update last Friday, it said it was speaking to an “administration specialist” as a precautionary measure in the event it is unable to secure more cash.
Creditor pursuing legal action
Scotgold insisted accumulated debts “will be addressed if a successful re-finance is achieved”.
But it also warned legal action that has been initiated by one creditor may “reduce the timescale to achieve a funding solution and necessitate an administration appointment”.
The firm said it was hoping to resolve this particular debt through negotiation and a repayment proposal.
As of November last year, Scotgold employed 96 people and its 2022 annual report highlighted “ambitious growth plans to continue to increase headcount during 2023”.
It is understood the payroll had fallen to around 85 before last week’s announcement.
Efforts to ramp up production at Cononish this year have hit challenges. Bosses were forced to shore up the firm’s finances after production levels fell “below plan” in the first quarter.
Police called in
They also called in the police after the email accounts of directors were accessed by “unauthorised persons” and “specious emails” sent in their names to numerous people.
More recently, chief financial officer Sean Duffy moved up to the role of interim chief executive to replace Phil Day, who quit to spend more time with his family in Australia.
Scotgold, whose mining activities in Argyll featured in popular BBC TV series Gold Town, has previously said Cononish is only the beginning of its Scottish gold ambitions.
The company holds 13 lease option agreements covering an area of nearly 1,120 square miles of the central Highlands, mostly in rural Perthshire.
Cononish is on the edge of Loch Lomond and the Trossachs National Park, within its boundary. Scotgold spent years trying to secure permission for its production plans
Scotgold acquired the site and its gold and silver mining rights more than 16 years ago.
The firm’s “first pour” of commercially produced gold was achieved on November 30 2020.