Scotgold raises £800,000 to push ahead with gold mine plans

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Scotgold Resources has raised around £475,000 through a share placing and agreed a £320,000 loan extension to develop plans for its Cononish gold mine near Tyndrum.

The firm said it had placed just over 15.3 million new shares at 3.1p each, and they will be admitted to trading on the Alternative Investment Market on Friday.

Those taking up the new shares have also been issued with an equal number of warrants, which can be exchanged for shares at a price of 4.5p each within 18 months.

Scotgold, which is also listed in Australia, is seeking about £25m in financing for the Cononish mine, which could generate up to £65m in pre-tax cashflow over its ten-year lifetime.

The company had already secured £1.18m in funding from RMB Resources, the mining finance arm of South African bank FirstRand, and today it said that loan facility is set to be increased by £320,000, subject to final credit approval.

Executive chairman John Bentley said: “This fundraising is an important step towards the commercialisation of our project at Cononish. We now have funds in place in order to complete our preparatory work and look forward to completing the development study early next year.”

Construction work at the Stirlingshire mine is due to begin in June, with first gold production expected early in 2014.