Scotgold ready to start trading on Aim after raising £704,000

Scotgold, which is already listed on the Australian Stock Exchange, has raised 704,000 ahead of the initial public offering (IPO) through the placing of 15.3 million ordinary shares at 4.6p per share. The flotation values the company at about 8million. Westhouse Securities acted as the firm's nominated adviser and broker.

The last Scottish IPO was in July 2007, when Fife-based i-design listed on London's junior market.

As revealed by The Scotsman's sister paper, Scotland on Sunday, earlier this month, Scotgold had originally hoped to raise 1m-2m through its IPO.

Scotgold chairman John Bentley said yesterday that a sudden spike in the firm's share price in Australia during the listing process led to the decision to offer fewer shares on Aim.

Bentley said although Scotgold has raised less than originally anticipated, the placing was oversubscribed amid strong interest from UK private client brokers and institutional investors.

The 704,000 will allow the company to explore further gold and silver deposits in a vast area of land beyond its mine in Cononish in the Loch Lomond and the Trossachs National Park.

Scotgold is currently awaiting planning permission for the mine. Analysts say it will have to raise a further 12m to put the mine into production. "We'd hope that about half of that would be debt financing," Bentley said. "We've had constructive feedback from a number of banks."

Tim Williams, director of mining and metals at Ernst & Young, said of the IPO: "It is great to see another new mining junior listing on the Aim market, after the long disruption to new listings caused by the global financial problems.

"With gold continuing to attract increasing investor interest, it is particularly gratifying that UK investors will be able to invest in a UK gold project, listed on a UK securities market."