Scotgold shares plunge after mine plan knocked back by national park

SHARES in Scotgold Resources, the firm hoping to open Scotland's only commercial gold mine, plunged 23 per cent yesterday after planning permission was controversially denied for its flagship project at Cononish, near Tyndrum.

Its shares recovered slightly to close down 0.87p at 2.88p after losing almost 30 per cent of their value earlier in the day.

The AIM-listed firm indicated that it was highly likely to appeal the decision by the National Park Authority Board to stop its goldmine in the Loch Lomond and the Trossachs National Park from going ahead.

Scotgold claims that up to 120 million worth of gold could be extracted from the mine, which would deliver a 50m benefit to the Scottish economy.

Scotgold's planning application was narrowly denied at a meeting in Tyndrum late on Wednesday night, by 12 votes to ten.

The previous week, Gordon Watson, director of planning for Loch Lomond and the Trossachs National Park, had recommended that the application be refused on environmental and uncertain economic grounds.

Scotgold said in a statement to the London Stock Exchange that the narrow voting results gave it hope that an appeal might be successful. "Scotgold is considering its options in relation to this refusal but is likely to appeal to the Scottish Ministers," the statement read.

"Any appeal would need to be lodged within three months and Scotgold will make a further release shortly to advise its intentions."

Chris Sangster, chief executive of Scotgold, added: "Scotgold is extremely disappointed at the decision but we were encouraged that the decision was by a very narrow majority. We consider that the proposal has significant merit in the local, regional and national context. The proposed development would have minimal environmental impact whilst it offered a distinct economic benefit locally.

"We remain committed to exploration at our other prospects located outside the National Park's boundaries at Beinn Udlaidh and others areas".

The firm, which is also listed in Australia, holds licences to explore for gold and silver over a vast 3,000 kilometre stretch of Central Scotland.

Around 90 per cent of these licences fall outside of the national park but Sangster has admitted in the past that these other projects may take up to ten years to reach the same stage of development as Cononish.

Despite Watson's arguments that the mine could potentially ruin the public's enjoyment of the area's "special qualities" - including the popular walk to Ben Lui - the project had the support of the local Strathfillan community council.

The council claimed the mine would generate 1.5m a year for the local economy and create up to 60 jobs in an area where there is high unemployment outside of the tourist season.