Scotgold asks investors to dig deep to raise £1m

The firm, which is listed in both Australia and the UK, this week re-submitted its planning application to start extracting ore at the old Cononish gold and silver mine near Tyndrum in the Loch Lomond and the Trossachs National Park.

Yesterday it said that it would offer more than 32 million shares at five Australian cents each, in order to raise AUS$1.6m (1.05m).

It said it intends to use the funds to "progress on the company's projects" and for general working capital, after first meeting the cost of the share offering.

The company - which is also involved in exploring for gold in the north west Highlands - does not yet have any working mines to provide it with income.

Scotgold's first application to mine at Cononish was refused last year on the grounds that the potential economic benefits could not be balanced against conservation concerns.

The company said the new application, following detailed talks with planners, included changes designed to reduce waste from the mining process and to lessen the impact work at the mine will have on the surrounding landscape.

It says the mine should produce 20,000 ounces of gold and 80,000 ounces of silver per year, of which 5,000 ounces of gold will be extracted as unrefined gold bars and be identifiable as "Scottish Gold", attracting a premium for jewellers and goldsmiths due to its scarcity and uniqueness should it be manufactured into jewellery.

The firm says that as much as 80m in additional economic activity will be generated in Scotland through the wider supply chain as a result of the establishment of the mine.

The price of gold has doubled since Scotgold's 2009 study into the viability of the mine, and it now says that returns to all stakeholders in the project are likely to be "considerable".

Scotgold's shares fell 5 per cent in London yesterday to reflect the new issue, closing at 4.75p.