Administrators have taken control of Scottish gold miner Scotgold which operates at Cononish, Argyll.
The announcement to the stock market this morning follows months of uncertainty about the future of the business.
Currently, it is only the Australian parent company – Scotgold Resources – that is in administration.
Its UK business and only “substantive asset”, SGZ Cononish, is not.
But an administration for SGZ Cononish is expected within days.
Trading of Scotgold’s shares on London’s Alternative Investment Market (AIM) was suspended in September after it said it needed “significant” funding to continue as a going concern.
On Wednesday, Scotgold warned it expected to proceed with an administration process “soon”.
Scotgold administration announcement
Daniel Bredenkamp and Christopher Pattinson of Pitcher Partners Accountants and Advisors have now been appointed as joint administrators for the Australian parent.
The statement said: “The administrators have assumed control of the company and will work with the board of directors during the administration period to maximise the outcome for all stakeholders of the company.
“The administrators will provide updates throughout the administration by way of announcements to the AIM and ask that shareholders refrain from contacting the administrators’ office at this time.”
What does it mean for Scotgold workers?
About 85 people employed at Cononish, near Tyndrum, have been on unpaid leave “until further notice” since late September.
But Scotgold has warned it may not be able to afford their redundancy packages.
In a communication to staff seen by The Press and Journal, the firm said: “You have now been on temporary lay-off for a period greater than six weeks.
“As such, you have the right to request statutory redundancy.
“We cannot guarantee that the payment will be fulfilled due to the current financial circumstances.”
Employees were urged to contact Acas (the Advisory, Conciliation and Arbitration Service) for independent advice.”
What went wrong?
Efforts to ramp up production at Cononish hit challenges earlier this year.
Bosses were forced to shore up the firm’s finances after production levels fell “below plan”.
And in late March shares in the company slumped after it highlighted the potential for a “material uncertainty” over its “very immediate” future.
Meanwhile, efforts to find funding have been unsuccessful.
Scotgold’s 16-year journey
It is more than 16 years since Scotgold Resources unveiled plans to reopen an abandoned gold mine at Cononish, on the edge of Loch Lomond and the Trossachs National Park.
Scotgold had acquired the assets for £800,000 from the Swiss-based Oak Consortium and sought permission from the Crown Estate, owners of the rights to the gold, to lease the site.
The “first pour” of commercially produced gold was achieved on November 30 2020.
And Cononish was hailed as only the start of the operator’s Scottish gold ambitions.
Scotgold still holds 13 lease option agreements covering an area of nearly 1,120 square miles of the central Highlands, mostly in rural Perthshire.
Conversation