One to Watch: Take a shine to gold

SCOTGOLD Resources is a gold exploration and development company. Its assets include the Cononish gold and silver deposit licences, covering more than 3,000sq km of central Scotland.

Scotland may not be California but it has yielded gold for generations, and Scotgold is the latest company to be looking to exploit the prospects. The company was established in 2007 and listed on the Australian securities exchange in 2008, having raised about A$5 million (2.9m) through an initial public offering.

Scotgold has raised about 700,000 through its London listing to accelerate the exploration and development of the Cononish deposit, which is 90km north of Glasgow. The deposit is thought to have 163,000 ounces of gold and 596,000 ounces of silver. Scotgold has resumed drilling at Cononish and is convinced it has commercial potential.

There are still some hoops through which the company must jump, including the need to secure planning approval to activate its licence. Scotgold is convinced the gold deposit is of very high grade, which should mean costs should be contained; Scotgold says the mine has an annual gold production target of about 20,000 ounces, which, if achieved, would pay for itself within two years. The board has an impressive pedigree and its gravitas would suggest this is not just a flight of fantasy but one with commercial possibilities.

Any investment implies a fairly high risk but at a recent presentation Scotgold's representatives were impressive and demonstrated their commitment to the concept. This investment should only be considered by those who are prepared to accept total loss but the commensurate awards may be appreciable.

The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.

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