Scotgold loses gloss after mine refusal

LOSSES at Scotgold Resources, the firm behind controversial plans to open a gold mine in the Loch Lomond and the Trossachs National Park, have almost doubled in the past year as it continues to face major delays to its flagship project.

• Chris Sangster: "Exploration continues with highly encouraging results"

The miner, which is listed on both the Australian and London stock exchanges, saw losses widen to A$1.14 million (690,000) from A$600,000 during the year to 30 June, accounts released yesterday show.

Scotgold had hoped to start production at its mine near Tyndrum this year but it was dealt a major blow last month when planning permission for the project was narrowly denied in a vote by members of the National Park Authority board.

Scotgold has three months to decide whether it will appeal the decision to Scottish ministers. As revealed by The Scotsman, the firm's management, led by chief executive Chris Sangster, have held private meetings with members of the board in an attempt to agree a deal that would avoid the lengthy and bureaucratic appeals process.

The accounts show Scotgold has already seen a substantial jump in administration costs over the last 12 months - from A$221,000 to A$391,000 - while employee and consultant fees also soared to A$376,000 from A$145,000 after it launched an initial public offering (IPO) in London in February. Revenues fell 51 per cent to A$46,600.

However, the latest figures reveal that Scotgold is sitting on a cash pile of A$1.59m, up from A$695,000 in 2009. It has raised A$5.2m from the issue of shares and options over the past 12 months.

The company reiterated its case for the Cononish mine, saying it has the potential to harvest up to 163,000 ounces of gold and 596,000 of silver - more than forecast at the outset of the project.

Scotgold has always argued that the mine would deliver a 50m boost to the Scottish economy given its potential to produce 120m worth of gold alone over its lifetime. But this assertion has been challenged by planners, who, in a report last month, deemed the economic benefits to be "very transitory and highly dependent on gold prices remaining at their current value".

Sangster yesterday repeated his disappointment at the board's decision, saying: "Scotgold is currently considering its options in order to further progress Cononish."

The company also holds licences to explore for gold and silver in a vast 3,000 kilometre stretch of Central Scotland - the majority of which lies outside of national park land.It said yesterday that vein systems at Beinn Udlaidh and Auch had produced "encouraging results".

"Exploration continues at our prospects outside the boundaries of the national park with highly encouraging results," Sangster added.

Nevertheless, the chief executive has previously admitted that it could take up to a decade for these other projects to reach the same stage as the Cononish mine.

Shares in Scotgold rose 9 per cent, or 0.25p, yesterday to 3p. The stock has fallen 25 per cent since planning was refused at the meeting in Tyndrum on 18 August. Scotgold bought the Cononish mine in 2007.